This document discusses how to create a context-level data flow diagram (DFD) and expand it into a level 1 DFD using an online bookstore as an example. It explains how to draw the context diagram showing a single "Online Bookstore" process interacting with a "Customer" entity through "order" and "ordered books" data flows. The Online Bookstore process is then decomposed into a level 1 DFD showing more detailed processes like "Receive Order", "Handle Invalid Order", and "Ship Order" along with data flows between them and data stores like "Orders". Creating additional levels of DFD is suggested to show more granular processes like packaging and billing that could be part of shipping an order.