The document describes data flow diagrams (DFDs), including how they differ from flowcharts by showing the flow of data rather than control flow. It then provides steps for creating DFDs using an example of a lemonade stand: 1) List activities, 2) Create a context-level DFD identifying sources and sinks, 3) Create a level 0 DFD identifying subprocesses, and 4) Create level 1 DFDs decomposing subprocesses and identifying data stores.