Tissue fluid is formed via capillaries squeezing out liquid due to high hydrostatic pressure (ultrafiltration), with only RBCs, WBCs and large proteins remaining in capillaries
Water is reabsorbed into the blood via osmosis due to large molecules lowering water potential, due to oncotic pressure, some molecules are pushed back into capillaries as well
Lymphatic System carries remaining fluid not pushed back into capillaries through the system and drains back into the blood via the subclavian vein
Lymph Nodes produce antibodies to prevent bacteria from entering the fluid as part of the immune defence system