Bone. Illustration of the microstructure of human bone. To the right is hard or compact bone. This forms the dense shell in the outer part of the bone, and contains numerous living osteocyte cells (red) linked by cytoplasmic processes in tiny channels called canaliculi. The compact bone surrounds the less dense spongy bone (left), which is also known as cancellous bone. Spongy bone consists of a network of processes called trabeculae. The spaces between the trabeculae contain a fatty tissue called bone marrow, where blood cells are manufactured.