Depending on how a network device (routers, switches, firewalls, load balancers, servers; basically anything connected to a network) is configured, log entries can be produced at specific time intervals and with specific data points. The internal storage in a network device is limited so the device can be configured to send its log entries to an external computer, typically a high-speed sever with lots and lots of data storage. A large network whose devices are producing frequent, detailed log entries can generate enormous amounts of data.

Splunk is a software system that can process that log data and make graphs and reports that make sense to humans. The reports can be customized for specific purposes, for instance, what network devices are connecting to outside computers and how muck data is sent to and from that destination computer. It goes much deeper and further than that, but this is basically what Splunk does.