Understanding OSI Communication Model in Hardware
How does a Hardware Engineer understands this? Please help.


You don't, it's all software* from there. The whole point of this layering is to hide information about what's in the other layers. Then you only have to think about the layer you're in. 

You provide services to the layer immediately above you.

You use services provided by the layer immediately below you. 

*In some devices, the 'software' might be accelerated by dedicated hardware, but it's still best to think of it as a process best described by decisions being made on data