Shader models are specifications that define the capabilities and features of shaders in graphics programming. They determine how graphics hardware processes visual effects, including lighting, textures, and colors. Each shader model version introduces new functions and optimizations, allowing developers to create more complex and realistic graphics in video games and applications. The most commonly referenced shader models are DirectX versions, such as Shader Model 2.0 and Shader Model 5.0. As technology advances, newer shader models support more intricate effects, like advanced lighting techniques and post-processing effects, enhancing the overall visual quality of rendered images.