Modem stands for 'MOdulator DEModulator'. It is a device used for conversion between analog signals and digital bits.

Computers store and process data in terms of 0s and 1s (digital form). However, to transmit data from a sender to a receiver, or while browsing the internet, digital data needs to be converted to analog signals. The modem at the sender's end acts as a modulator that converts digital data into analog signals. The modem at the receiver's end acts as a demodulator that converts analog signals back into digital data for the destination node to understand. Thus, a modem enables communication between computers through transmission media.