In actual fact water travels up the stem on the tree through the xylem which is the layer of wood under the cambium layer. Xylem cells die soon after they form and are rigid - that's the part of the tree we call wood.
Sugars and hormones travel back down in the phloem which consists of living cells which are located in the bit we call bark, outside the cambium layer.
The cambium layer is the area where cells are being generated. Cambium consists of undifferentiated cells - they don't know what they are yet and can become whatever is needed by the plant. The ones on the inside usually become xylem (wood), the ones on the outside become bark as new cells continue to form between the 2 layers.
Sounds simple
