An IP address is a unique string of numbers assigned to each device connected to a computer network that uses the Internet Protocol for communication. It serves two main functions: identifying the host or network interface and providing the location of the device in the network. There are two types of IP addresses: IPv4 and IPv6. IPv4 addresses consist of four sets of numbers ranging from 0 to 255, while IPv6 addresses are longer and designed to accommodate the growing number of devices on the internet. Both types ensure that data is sent to the correct destination.