Mobile IP is an Internet Engineering Task Force (IETF) standard designed to allow mobile device users to move between networks while maintaining a permanent IP address. It uses a home address for identification and a care-of address for routing. Key functions include foreign agent discovery, home agent registration using registration requests and replies, and tunneling via encapsulation to forward packets to the mobile node's care-of address. Route optimization enables direct communication between a correspondent node and the mobile node to improve efficiency.