A PHP file is a text file that contains PHP code, generally with a .PHP extension. It is an integral part of building dynamic web pages and applications. A PHP file can include a combination of HTML, CSS, JavaScript, and PHP code. This versatility enables developers to integrate dynamic functionalities with the presentation layer.

When a client's web browser requests a PHP file, the server processes the PHP code within the file before sending the final output to the browser. This server-side execution allows developers to create dynamic and interactive content for the users.