A CSU/DSU, is a hardware device that converts, a digital data frame, from the communications technology used on a local area network (LAN) into a frame appropriate to a wide-area network (WAN), and vice versa. It acts, as a translator between the LAN data format, and the WAN data format. CSU stands for Channel Service Unit, and DSU, Data Service Unit. Some consider a CSU/DSU a type of digital modem which more expensive and connects to a faster network. (But unlike a normal modem, which changes the signal from digital to analog,) a CSU/DSU is a modem changes the signal from one digital format to another digital format.
CSU/DSU works like a Digital Modem
Think of it, as a high end modem, which is used to connect a data terminal equipment (DTE), such as a router, to a digital circuit equipment (DCE), such as a digital signal T1 or T3 line.
The CSU / DSU is a digital-interface device used to connect a router, to a digital circuit, like serial interfaces T1 or T3 line. The CSU/DSU also provides signal timing for communication between these devices.
As you see in this diagram.
DTE and DCE are two separate devices. The DTE might be a PC or a Router, where is the DCE might be a modem or something that going to communicate the information like T1. So DTE the end user device something that’s going to put the information on to the network. all the DCE does is communicate that information. Also DCE is what going to dictate the clock rate.
So, in addition to though the DTE and DCE, we have got these CSU/DSU component, now the CSU/DSU component is within one piece of hardware, where is the DTE and DCE those are separated. So, DSU and CSU that is a piece of technology that is going to translate the LAN information in to WAN information. So, then in other side of WAN it will translate WAN information back to LAN information. So those, essentially those to DTE devices can communicate.

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