ARP (Address Resolution Protocol) operates at Layer 2 to map IPv4 addresses to MAC addresses. When a device needs to send data to an IP address on the local network, it broadcasts an ARP request asking 'Who has this IP?' The device with that IP responds with its MAC address. The requester then caches this mapping in its ARP table. This is essential because Ethernet frames use MAC addresses, not IP addresses, for delivery within a broadcast domain.