HDLC/PPP protocol as described is layer 2 protocol.
But I have the confusion of why is this required to be configured on a routers serial interface.
that too when the connection is as below,
Router1----DTE-----SERIAL--------DCE--Router2
Adding more Info: What if this had only switches instead of routers
good fundamental question. HDLC / PPP are certainly layer 2 protocols. I will try to explain why layer two configuration is required on router interface.
What we actually mean when we say that router is layer 3 device? When we say router is layer 3 device that means it can operate in layer 3 and all layers below it. [I will give you an analogy in real life, when we say the Building has 3 floors means it has floor 1, floor 2 and floor 3]. Same as router works in layer 3 means it operate at maximum on layer 3 but also performs layer 2 and layer 1 functions.
In detail – When router has a packet to be sent out. It does following action.
A) Layer 3 function i) Firth will check the network is present in routing table. ii) If yes, it route the packet to outgoing interface. Now outgoing interface is having the packet in its queue and need to put on physical channel.
B) Layer 2 function i) Before sending it on physical channel, router now need to encapsulate the IP packet into a new layer 2 frame, depending on data link in between two router. A frame begins with (frame start) - preamble and delimiter frame. So IP packet can be carried out as a frame on transmission network. Router frames it into PPP or HDLC frame format. The encapsulation should be same on both the routers.
C) Layer 1 function i) Once the frame is available in cache memory of the interface. Router interface converts it in BITS and transmits it on physical line.
Please feel free if you still have doubts.
Hope that helps