Lost luggage: What happens to your baggage after check-in

The sweet relief of watching your luggage appear on a baggage carousel, as it rises out from beneath the underworld of an unfamiliar airport, is an experience every traveller has felt at one point or another.
But how does your baggage make it from the check-in desk to your final destination? And what happens if you’re one of the unlucky passengers whose luggage gets lost along the way?