The OSI model is a 7-layer model developed by ISO in 1984 to standardize network communication. Each layer defines a specific function and protocols are used to define communication between layers. While data flows down from the Application layer to the Physical layer, it is not necessary for data to pass through every layer - some can be skipped. The layers help encapsulate data moving through the network, with each layer adding its own header. This allows different types of networks to communicate through a common protocol.