Packet switching approaches include datagram and virtual-circuit approaches. The virtual-circuit approach involves three phases: setup, data transfer, and teardown. During setup, routers create entries for a virtual circuit based on request and acknowledgment packets exchanged. This establishes a defined path for network-layer packets to follow, identified by a flow label. Once the virtual circuit is set up, packets can be forwarded independently based only on the flow label. Finally, teardown packets remove the entries from router tables once transfer is complete.