An IP camera works like any other network device: it has its own IP address and sends video over a network cable or Wi-Fi to a recorder (NVR) or server.
Compared to analog cameras, IP cameras usually offer higher resolution and smart features such as person or vehicle detection. Power is often delivered over the same network cable using PoE.
Example
In an office, each camera connects to a PoE switch with a single network cable — no separate power cabling is needed.