CAPWAP (Control and Provisioning of Wireless Access Points) is a protocol that enables centralized control of Fit APs by an AC (Access Controller).

Option A (Incorrect): CAPWAP tunnels only control traffic, while data traffic can be sent via direct forwarding or tunneled forwarding.

Option B (Incorrect): A Fit AP can discover an AC via multiple methods, including broadcast, static configuration, or DHCP Option 43.

Option C (Correct): APs encapsulate user data into CAPWAP packets and send them to the AC for further processing.

Option D (Incorrect): CAPWAP is based on UDP, not TCP, for better efficiency and lower latency.

Thus, the correct answer is C.