I would like to understand the execution steps involved in building Docker Images using Dockerfile. Couple of questions I have listed down below. Please help me in understanding the build process.

Dockerfile content

#from base image
FROM ubuntu:14.04
#author name
MAINTAINER RAGHU
#commands to run in the container
RUN echo "hello Raghu"
RUN sleep 10
RUN echo "TASK COMPLETED"

Command used to build the image: docker build -t raghavendar/hands-on:2.0 .

Sending build context to Docker daemon 20.04 MB
Step 1 : FROM ubuntu:14.04
---> b1719e1db756
Step 2 : MAINTAINER RAGHU
---> Running in 532ed79e6d55
---> ea6184bb8ef5
Removing intermediate container 532ed79e6d55
Step 3 : RUN echo "hello Raghu"
---> Running in da327c9b871a
hello Raghu
---> f02ff92252e2
Removing intermediate container da327c9b871a
Step 4 : RUN sleep 10
---> Running in aa58dea59595
---> fe9e9648e969
Removing intermediate container aa58dea59595
Step 5 : RUN echo "TASK COMPLETED"
---> Running in 612adda45c52
TASK COMPLETED
---> 86c73954ea96
Removing intermediate container 612adda45c52
Successfully built 86c73954ea96

In step 2 :

Step 2 : MAINTAINER RAGHU
    ---> Running in 532ed79e6d55

Question 1 : it indicates that it is running in the container with id - 532ed79e6d55, but with what Docker image is this container formed ?

---> ea6184bb8ef5

Question 2 : what is this id? Is it an image or container ?

Removing intermediate container 532ed79e6d55

Question 3 : Is the final image formed with multiple layers saved from intermediate containers?

Yes, Docker images are layered. When you build a new image, Docker does this for each instruction (RUN, COPY etc.) in your Dockerfile:

create a temporary container from the previous image layer (or the base FROM image for the first command;
run the Dockerfile instruction in the temporary "intermediate" container;
save the temporary container as a new image layer.

The final image layer is tagged with whatever you name the image - this will be clear if you run docker history raghavendar/hands-on:2.0, you'll see each layer and an abbreviation of the instruction that created it.

Your specific queries:

1) 532 is a temporary container created from image ID b17, which is your FROM image, ubuntu:14.04.

2) ea6 is the image layer created as the output of the instruction, i.e. from saving intermediate container 532.

3) yes. Docker calls this the Union File System and it's the main reason why images are so efficient.