Frame Relay is a packet-switched WAN protocol that operates at the data link layer. It uses virtual circuits to transfer variable-length packets across Frame Relay networks. Frame Relay supports both permanent virtual circuits (PVCs) and switched virtual circuits (SVCs). PVCs are permanently established connections, while SVCs require call setup. Frames contain a data-link connection identifier (DLCI) and bits to implement congestion notification like FECN and BECN.