When a packet arrives from an external network, like the internet, it is routed to the P-GW.
The P-GW takes this packet and places it in another IP packet (encapsulates it) and then forwards the encapsulated data to the Serving-Gateway.
The S-GW then takes the encapsulated data it just recieved and sends it on inside another IP packet to the eNB.
The encapsulated data sent from the P-GW to the S-GW, and the S-GW to the eNB, is carried by UDP, even if the traffic inside is TCP.
Communication between these elements can be done using internal addressing, and this addressing information will never be visible to the UE or the external networks, and only the P-GW needs to be reachable from the external networks.
This encapsulation is done using GTP – the GPRS Tunneling Protocol.
Specifically IP traffic to and from the UE is contained in GTP-U (User data) packets.
The control data for GTP is contained in GTP-C packets, which sets up tunnels for the GTP traffic to flow through (more on that later).
To summarize, user IP packets are encapsulated into GTP-U packets, which are a transported by UDP between the different nodes (S-GW and eNB)