Mobile IP is an open standard that allows users to maintain the same IP address and ongoing applications while roaming across different IP networks, ensuring uninterrupted communication. It utilizes a home address for identification and a care-of address that changes based on the user's location, with home and foreign agents managing data packet routing. Mobile IP is contrasted with Cellular IP, which serves more localized mobility needs, and both protocols are foundational in supporting advancements in internet protocol versions like IPv6, which enhances mobility and provides better security.