1. Sponsorship – when an employer applies for approval by the Immigration Department as a standard business sponsor.

The Australian Government Department of Immigration and Citizenship in Sydney on Monday, May 28, 2012. (AAP Image/April Fonti) NO ARCHIVING Source: AAP
2. Nomination - when an approved sponsor identifies a position to be filled.The position must relate to an eligible occupation on the Consolidated Skilled Occupations List.

Source: AAP
3. Visa Application - when the overseas skilled worker applies for the visa. A 457 visa cannot get processed without an approved sponsor and nomination.

Source: SBS Radio