WSGI, or Web Server Gateway Interface, is a specification that defines how web servers communicate with Python web applications. It acts as a standard interface, allowing developers to create web applications that can run on any compliant server, promoting compatibility and flexibility in the Python ecosystem. By using WSGI, developers can separate their application logic from the web server, making it easier to deploy and manage applications. Popular frameworks like Django and Flask are built on WSGI, enabling them to handle requests and responses efficiently while supporting various web servers like Gunicorn and uWSGI.