Packet switching is the technique that underlies modern data networks, including the Internet. Instead of reserving a physical channel for the whole duration of a conversation, the sending host breaks the message into small units called packets.

Each packet carries its own header containing the source address, destination address, and a sequence number, followed by a chunk of the actual data (payload). Because every packet is self-describing:

• Packets are forwarded independently, hop by hop, and different packets of the same message may travel over different routes depending on link availability and congestion.
• Intermediate routers use store-and-forward: each packet is fully received, buffered, examined, and then forwarded toward its destination.
• At the destination the sequence numbers are used to reassemble the packets in the correct order, even if they arrived out of order.

This is precisely what the correct choice describes — data divided into smaller packets transmitted independently. The key benefit is statistical multiplexing: since no single pair of users monopolizes a link, many conversations share the same physical links efficiently, giving high utilization and graceful behaviour under varying load.

Transmitting the entire message as one continuous signal describes message/analog signalling rather than packet switching. A dedicated physical path between sender and receiver, and permanently allocated fixed bandwidth, both describe circuit switching (as used in the traditional telephone network), which is the opposite approach — it wastes capacity during silent periods because the reserved path stays idle even when nothing is being sent.