How does a man-in-the-middle attack work?

What will be an ideal response?

In the well-known man-in-the-middle attack, an attacker monitors (or sniffs) packets from the network, modifies them using IP spoofing techniques, and inserts them back into the network, allowing the attacker to eavesdrop as well as to change, delete, reroute, add, forge, or divert data. In a variant attack, the spoofing involves the interception of an encryption key exchange, which enables the hacker to act as an invisible man-in-the-middle - that is, eavesdropper - in encrypted exchanges.