The physical layer is responsible for transmitting signals over a transmission medium. It handles functions like signal encoding/decoding, synchronization, and data rates. Transmission is impaired by attenuation, distortion, and noise as signals propagate. Attenuation reduces signal strength, distortion changes signal shape, and noise corrupts signals. Theoretical maximum data rates are given by Nyquist's formula for noiseless channels and Shannon's formula for noisy channels, which depends on bandwidth and signal-to-noise ratio. Higher data rates require wider bandwidths, more signal levels, or less noise.