The Differentiated Services (DiffServ) algorithm is a Quality of Service (QoS) mechanism used in computer networks to prioritize and manage network traffic based on different traffic classifications. It aims to provide varying levels of service quality for different types of network traffic, such as voice, video, or data.

The DiffServ algorithm consists of the following steps:

1. Traffic Classification: Incoming data packets are classified into different classes or categories based on their characteristics. This can be achieved through various methods such as examining protocol headers, port numbers, IP addresses, or using Deep Packet Inspection (DPI) techniques. Each class of traffic is assigned a Differentiated Services Code Point (DSCP).

2. Traffic Conditioning: In this step, traffic is conditioned by applying policies to ensure that it meets specific requirements and conforms to the desired QoS parameters. This may involve actions like traffic shaping, traffic policing, or traffic marking. Traffic shaping smooths the traffic flow by adjusting the rate at which packets are transmitted, while traffic policing enforces traffic limits by discarding or marking excessive packets. Traffic marking involves modifying packet headers to include the appropriate DSCP value.

3. Traffic Queuing: After conditioning, the traffic is placed into different queues based on their assigned DSCP values. Each queue represents a specific class or priority level. A traffic scheduler determines the order in which packets from different queues are transmitted onto the network. Higher priority traffic is given precedence over lower priority traffic.

4. Congestion Management: When network congestion occurs, the DiffServ algorithm helps manage and control the bandwidth utilization. This is achieved through techniques like weighted fair queuing (WFQ), random early detection (RED), or weighted random early detection (WRED). WFQ allocates bandwidth to the different queues based on their assigned weights. RED/WRED randomly drop or mark packets before congestion becomes severe, encouraging the sending devices to slow down.

5. Traffic Policing: In addition to traffic conditioning, DiffServ also provides traffic policing mechanisms to enforce Service Level Agreements (SLAs) or prevent abuse of network resources. Traffic policing monitors the incoming and outgoing traffic rates for each class, and if the traffic exceeds predefined thresholds, it takes necessary actions such as dropping or marking packets to maintain the desired QoS levels.

6. QoS Aggregation: In a network with multiple DiffServ-capable routers, QoS information can be aggregated along the path by encapsulating DSCP markings inside Differentiated Services Pointers (DS Field) of IP headers. This allows routers to apply appropriate QoS policies based on the aggregated DSCP values.

Overall, the DiffServ algorithm provides a scalable and flexible approach to prioritize traffic based on different classes, ensuring efficient utilization of network resources and meeting the varying QoS requirements of different applications or services.