Firewalls act as barriers between internal networks and external networks like the internet. They inspect incoming and outgoing network traffic and allow or block it based on preset rules. Firewalls can be implemented as standalone hardware devices or as software installed on computers and servers. They operate at both the network and application layers, using techniques like packet filtering, network address translation, and proxy services to monitor traffic and secure networks. Well-configured firewalls help protect networks from threats like port scans, viruses, and unauthorized access.