Layer 4 refers to the transport layer in the OSI model, which is a framework used to understand network communication. This layer is responsible for providing end-to-end communication services for applications. It ensures that data is transferred reliably and in the correct sequence, using protocols like TCP (Transmission Control Protocol) and UDP (User Datagram Protocol). In Layer 4, data is segmented into smaller packets for transmission. TCP offers reliable communication with error-checking and flow control, while UDP provides faster, connectionless communication without guarantees. This layer plays a crucial role in managing how data is sent and received across networks.