This is a big question. There are many challenges in providing a complete answer to this question, given the fact that we are not God and do not exist in the same realm He does. It is sort of like asking a pawn in a chess match to describe the full nature of the chess master that is directing its movements. We can only know what we can see and deduce from our senses and from what He tells us.
To answer this awesome question, we have the privilege of hearing direct from the source, through His Word. There is a lot to this topic, so we will take a chunk at a time and look at it from a few different perspectives.