The paraxial mesoderm is a layer of mesoderm located on either side of the notochord during early embryonic development. It plays a crucial role in forming structures such as somites, which eventually develop into the vertebrae, muscles, and dermis of the skin. As the embryo develops, the paraxial mesoderm segments into somites, which are essential for the organization of the body plan. This process is vital for proper segmentation and the formation of the nervous system and musculoskeletal system, influencing the overall structure and function of the organism.