This is kind of informal and may be wrong, but it helped me.  It's
basically a summary of clientserver.c and authenticate.c.

 -- Martin Pool <mbp@samba.org>


This is the protocol used for rsync --daemon; i.e. connections to port
873 rather than invocations over a remote shell.

When the server accepts a connection, it prints a greeting

  @RSYNCD: <version>.<subprotocol>

where <version> is the numeric version (see PROTOCOL_VERSION in rsync.h)
'.' is a literal period, and <subprotocol> is the numeric subprotocol
version (see SUBPROTOCOL_VERSION -- it will be 0 for final releases).
Protocols prior to 30 only output <version> alone.  The daemon expects
to see a similar greeting back from the client.  For protocols prior to
30, an absent ".<subprotocol>" value is assumed to be 0.  For protocol
30, an absent value is a fatal error.  The daemon then follows this line
with a free-format text message-of-the-day (if any is defined).

The server is now in the connected state.  The client can either send
the command

  #list

to get a listing of modules, or the name of a module.  After this, the
connection is now bound to a particular module.  Access per host for
this module is now checked, as is per-module connection limits.

If authentication is required to use this module, the server will say

  @RSYNCD: AUTHREQD <challenge>

where <challenge> is a random string of base64 characters.  The client
must respond with

  <user> <response>

where <user> is the username they claim to be, and <response> is the
base64 form of the MD4 hash of challenge+password.

At this point the server applies all remaining constraints before
handing control to the client, including switching uid/gid, setting up
include and exclude lists, moving to the root of the module, and doing
chroot.

If the login is acceptable, then the server will respond with

  @RSYNCD: OK

The client now writes some rsync options, as if it were remotely
executing the command.  The server parses these arguments as if it had
just been invoked with them, but they're added to the existing state.
So if the client specifies a list of files to be included or excluded,
they'll defer to existing limits specified in the server
configuration.

At this point the client and server both switch to using a
multiplexing layer across the socket.  The main point of this is to
allow the server to asynchronously pass errors back, while still
allowing streamed and pipelined data.

Unfortunately, the multiplex protocol is not used at every stage.  We
start up in plain socket mode and then change over by calling
io_start_buffering.  Of course both the client and the server have to
do this at the same point.

The server then talks to the client as normal across the socket,
passing checksums, file lists and so on.  For documentation of that,
stay tuned (or write it yourself!).


------------
Protocol version changes

30	(2007-10-04, 3.0.0pre1)

	The use of a ".<subprotocol>" number was added to
	@RSYNCD: <version>.<subprotocol>

25	(2001-08-20, 2.4.7pre2) 

	Send an explicit "@RSYNC EXIT" command at the end of the
	module listing.  We never intentionally end the transmission
	by just closing the socket anymore.