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With my simple understanding of the Internets nature, it is basically a network full of networks along with servers and hard-drives that hold data. Which comes to my question on how are these servers connected to each other to form this massive network we call the Internet?
Do the Internet Service Providers just send out cables across the continents to eachother on a mutual deal or something?
The Internet is better described as a hierarchy of networks, with small carriers connected to mid-size carriers, who in turn are connected to worldwide providers. This article will give you a nice overview.
Like you said, the internet is something like multiple networks along the planet connected each other. On your example, there are some networks, small networks, eg: your company network, taht is connected to your ISP, and that ISP is connected to a bigger ISP, and so on, until arrive to BIGGER points of interconnection, called IPX, forming the internet.
Here, a picture of Wikipedia, from this link. https://es.wikipedia.org/wiki/Tier_1
As you can see, the networks are separated by some characteristics, as size,...
On the image, you are located on the lower side, like an internet user.
Suppose you want to start an ISP (Internet service Provider).
You will need a group of servers, for example for DNS, e-mail, etc.
You will need to put a router to connect your servers and users to the rest of the world, so the best place is an Internet exchange point (IX). The primary purpose of an IX is to allow networks to interconnect directly (as they are inside the same building), eliminating the cost of installing costly cables from your ISP to high-tier ISPs.
You put your equipments on the IX premises, get agreements with other ISPs on the same IX and now your ISP is public and working. You pay a rent for using the space and electrical power of the IX.
The more connections you have, the better service you give. So, there comes a time when your ISP needs to connect to other ISP not available through the IX, let's call it ABC.
Then you can rent the use of a limited bandwith on a link to ABC belonging to a third-party provider, let's call it XYZ.
Your ISP is growing and then there is a moment that you can consider stop paying a rent for the limited bandwith to XYZ and then you deploy your own connection with more bandwith directly to ABC eliminating the monthly fee.
The ISP keeps growing, so you are considering to connect directly to ISPs on other continents, then you have to pay a monthly fee for bandwith on a submarine cable, unless your business has grown so much that you can deploy your own one.
Networks interconnect in two main ways. (and various variants in between the two) in a "transit" relationship there is a provider-customer relationship. The provider provides the customer with the service of carrying their data to and from the internet in general. A peering relationship is a more mutual thing, it allows network A (and their customers) to communicate with network B and their customers but it's not transitive. If A peers with B and B peers with C thendata will not be allowed to flow from A to C via B. Peering is usually settlement free (neither side pays the other though someone has to pay for the actual link) and may go via a private connection or via an internet exchange point depending on traffic volumes and local customs.
There are exceptions but usually the long distance links will either be within a given providers network (and obviously paid for by that provider) or from a provider to their customer (and paid for by the customer). Peering links are usually relatively local.
Larger providers will often refuse to peer with smaller ones because they see it as losing a potential customer and/or as an unbalanced relationship where the large provider does most of the work of moving data around and the small provider gets most of the benefit. This is more of an issue in the US than in Europe as the access providers are larger, more monopolistic and are often vertically integrated with tier 1 providers.
At the top of the pile are the "tier 1" providers. These do not buy transit from anybody and all peer with each other. Becoming a new tier 1 is extremely difficult.
As I understand it all of the tier 1 providers have a major presence in the USA (though many are now owned by foreign firms) and peer with each other there. Most of them also have a substantial presence in western Europe and peer with each other there too. That is a large part of the reason why internet transit is much cheaper in the US and western Europe than elsewhere.
Sometimes a provider may establish a point of presence (a router in a rented rack, connected back to their main network) in cities or countries where they don't otherwise operate in order to participate in peering there.
