Sometime ago, someone asked about Packet and circuit switching ... I am just copying and pasting how cisco explains these terms (which are not very clear to me either :) Notes within the brackets are mine.
Packet-switched networks were developed to overcome the expense of public circuit-switched networks and to provide a more cost-effective WAN technology. When a subscriber makes a telephone call, the dialed number is used _to set switches in the exchanges_ (whatever that might be) along the route of the call so that there is a continuous circuit from the originating caller to that of the called party (How does the dialer number do the job of an operator might be even more complicated). Because of _the switching operation_ used to establish the circuit, the telephone system is called a circuit-switched network. (Very nice definition :). If the telephones are replaced with modems, then the switched circuit is able to carry computer data. (as clear as mud!)
The internal path taken by the circuit between exchanges is shared by a number of conversations. Time division multiplexing (TDM) is used to give each conversation a share of the connection in turn. TDM assures that a fixed capacity connection is made available to the subscriber. ( isn't this cool? whatever that might mean :)
If the circuit carries computer data, the usage of this fixed capacity may not be efficient. For example, if the circuit is used to access the Internet, there will be a burst of activity on the circuit while a web page is transferred. This could be followed by no activity while the user reads the page and then another burst of activity while the next page is transferred. This variation in usage between none and maximum is typical of computer network traffic. Because the subscriber has sole use of the fixed capacity allocation, switched circuits are generally an expensive way of moving data.
(Is all this stuff in CCNA exam? )
An alternative is to allocate the capacity to the traffic only when it is needed, and share the available capacity between many users. With a circuit-switched connection, the data bits put on the circuit are automatically delivered to the far end because the circuit is already established. If the circuit is to be shared, there must be some mechanism to label the bits so that the system knows where to deliver them. It is difficult to label individual bits, therefore they are gathered into groups called cells, frames, or packets. The packet passes from exchange to exchange for delivery through the provider network. Networks that implement this system are called packet-switched networks.
The links that connect the switches in the provider network belong to an individual subscriber during data transfer, therefore many subscribers can share the link. Costs can be significantly lower than a dedicated circuit-switched connection. Data on packet-switched networks are subject to unpredictable delays when individual packets wait for other subscriber packets to be transmitted by a switch.
The switches in a packet-switched network determine, from addressing information in each packet, which link the packet must be sent on next. There are two approaches to this link determination, connectionless or connection-oriented. Connectionless systems, such as the Internet, carry full addressing information in each packet. Each switch must evaluate the address to determine where to send the packet. Connection-oriented systems predetermine the route for a packet, and each packet need only carry an identifier. In the case of Frame Relay, these are called Data Link Control Identifiers (DLCI). The switch determines the onward route by looking up the identifier in tables held in memory. The set of entries in the tables identifies a particular route or circuit through the system. If this circuit is only physically in existence while a packet is traveling through it, it is called a Virtual Circuit (VC).
The table entries that constitute a VC can be established by sending a connection request through the network. In this case the resulting circuit is called a Switched Virtual Circuit (SVC). Data that is to travel on SVCs must wait until the table entries have been set up. Once established, the SVC may be in operation for hours, days or weeks. Where a circuit is required to be always available, a Permanent Virtual Circuit (PVC) will be established. Table entries are loaded by the switches at boot time so the PVC is always available.
( I do not know what kind of audience CISCO has in mind, but if this stuff is for a beginner that is trying to study for CCNA, then I am too stupid for CISCO, or to waste my time with their exams)