Project Ara is Google's modular smartphone platform that allows users to customize their device by adding or replacing hardware modules. It was originally developed by Motorola under Google but is now led by Google. The goal is to give users more flexibility to update parts instead of replacing the whole phone. The modular design consists of an endoskeleton frame with slots for interchangeable modules that provide functions like cameras, processors, and batteries. Challenges include ensuring reliable connections between modules and addressing issues of weight, size, and battery life.