Basically it's a numerical label assigned to each device connected to a computer network that uses the Internet Protocol  for communication.

Two types:

• Private IP address - Used within a local network (provided by a local network). The data or information sent or received within the same network. Refer following image for private ip shown by command 'ipconfig' on console.
• Public IP address - Used outside the local network (provided by ISP ). The data are transmitted over the internet.

Two versions: (Refer marked green box from following image)

• IPv4 (32 bits, looks like - 169.254.13.109)
• IPV6 (128 bits, looks like - fe80::25d0:9cac:b08a:d6d%9)

This helps to identify computers/any network device on the Internet.

When your computer or device sends any communication request, it tags the request with your IP address. That way communicator knows where to send the response.