Substorm phenomena are reviewed with emphasis on the magnetospheric source region of the onset, on the morphology of the initial breakup and subsequent activations, and on the variable character of individual substorms. We provide evidence that before the substorm onset and during the following activations an intense, thin current sheet is formed at the interface between the quasi-dipolar and taillike magnetic field regions. We infer that the initial breakup, the following multiple activations, pseudobreakups, and other short-term activations during nonsubstorm times are all similar in morphology and have the same formation mechanism. We postulate that the elementary units of energy dissipation, impulsive dissipation events, which are localized in space and have a short lifetime of ~1 min, are the manifestations of tail reconnection. We also emphasize the evidence that previous authors have presented in favor of this time dependence and localization. On the basis of the above, we suggest that there are two basic magnetospheric processes responsible for energy storage and dissipation during both substorm and nonsubstorm times: A global and slow quasi-static tail reconfiguration responsible for the energy storage, and a sequence of local, sporadic, short-term energy dissipation events. These competitive processes can be observed most the time in some part of the plasma sheet; their relative intensity determines the type of large-scale dynamic evolution. In this scenario, the various dynamical situations are interpreted as variations in the balance between the two competing processes. ¿ American Geophysical Union 1996