Urine formation involves three key processes: glomerular filtration, reabsorption, and tubular secretion. Glomerular filtration occurs in the nephron, filtering blood plasma while reabsorption occurs mainly in the proximal convoluted tubule, with 99% of the filtrate being reabsorbed and only 1.5 liters resulting as urine. The loop of Henle and vasa recta create a concentration gradient necessary for the production of concentrated urine.