Here's how it works:

* Endocytosis: The plasma membrane invaginates (folds inward) and surrounds a substance, forming a pocket. This pocket then pinches off, creating a vesicle that carries the substance into the cell.

* Exocytosis: Vesicles containing substances destined for release outside the cell fuse with the plasma membrane, releasing their contents into the extracellular space.

In summary: Vesicles are formed through the dynamic process of the plasma membrane folding in (endocytosis) or out (exocytosis) to encapsulate and transport substances within or outside the cell.