The Onion Architecture is a software architecture pattern that prescribes layering an application into distinct groups that are organized around a common central layer. The innermost layers define the core domain and business logic, while the outer layers deal with infrastructure and interfaces. This allows the core domain logic to be independent of the outer layers and simplifies testing. Key benefits include improved maintainability, testability, and loose coupling between layers. The core domain objects are placed in the center Domain layer, with Services, Infrastructure, and User Interface layers arranged concentrically outward.