The acronym IP stands for Internet Protocol in networking. It is a set of rules that governs how data packets are sent across a network, enabling devices to communicate with each other efficiently. An IP address serves as a unique identifier for devices on a network, allowing information to be routed correctly. There are two main versions of IP: IPv4, which uses 32-bit addresses, and IPv6, which employs 128-bit addresses to accommodate a growing number of connected devices in modern networks.