Packet

Packet and circuit are fundamental terms in data communication.

To put it simply, when you want to establish communication from point A to point B, it passes through several gateways/routers and so on along the way. So, depending on how they are combined, there can be many routes from point A to point B. Just as your route changes depending on how you transfer between buses and subways.

The method that decides this route when the communication is first established and uses the same route until the connection is closed is the circuit method. In this case, while you are using a route you occupy it completely, so you pay communication charges for occupying that route.

The packet method splits the data to be moved into pieces of a fixed size (this unit is a packet), sends each piece to the destination over a different route, and then reassembles the pieces in order. This method has the advantage that data can be transmitted without occupying a fixed route, and the charge is presumably determined by how many pieces you sent.

A typical example of circuit is today's voice call connection method, and packet is mainly used for data communication. When you connect a voice call, the call charge is billed by time whether you speak or not, but when data communication is connected with the packet method, you are billed by how many packets you sent and received, regardless of how long you were connected. Circuit occupies the route, so it is advantageous when uploading/downloading large amounts of data, and packet is good when you use small data only occasionally. In other words, packet is cheaper for surfing small, mostly text-based menus on nate and similar services, but once you finish surfing the menus and start downloading ringtones/images and so on, circuit becomes the better deal from then on. Of course, in the case of CDMA mobile phones, an additional method called code division is added on top, which acts as another variable, but they basically still rely on the theory above.

Reference: Cetizen.com Differences between packet and circuit