ActiveModel is a gem that provides common interfaces and functionality for model classes, including validation, dirty tracking, callbacks, and serialization. It includes modules like ActiveModel::Validations, ActiveModel::Dirty, and ActiveModel::Callbacks that define APIs for validations, detecting changes, and hooks. While part of Rails, ActiveModel can also be used independently with the 'activemodel' gem. It provides fundamental modeling frameworks that both ActiveRecord and other ORM/ODM gems are built upon.