Please note that the following contains simplified explainations from a high-level. It is not meant to be an all-encompassing description of the topic but rather an exploration thereof.
Internet Service Providers (ISPs) are the companies who have a vested interest in connecting the internet together. They build the networks, lay the cable, and deal with international politics so you don’t have to. This is how they work.
What You Pay For
An ISP is a lot like a construction company. You normally wouldn’t want to build a house from scratch, and similarly, you wouldn’t want to connect to the internet backbone from scratch either. They handle IP allocation, NAT traversal, DNS caching, and all the other services you don’t know about because you don’t have to. ISPs are what connect you to the servers across the globe without having to negotiate firewall contracts and network infrastructure. Having to negotiate international treaties every time you wanted to email a friend in Sweden could be a pain, ISPs make it so that you don’t have to.
What You Get
This differs widely across providers and internationally. For the most part, each ISP will offer you a direct connection to their network of routers and servers, but they can also offer customers everything from custom firewalls to network architecture for extremely large networks like WANs and metropolitan area networks. Oftentimes they even offer hardware for connecting within the network like modems and routers, and sometimes they even offer connections to services like domain name registration and email hosting.
Where Does the Internet Come From?
The short answer is you. Yours and every other device on the internet are connected and that’s what makes up the world wide web or the internet. Your internet service is your gateway to this interconnected web, and that’s provided by ISPs. ISPs get their connection to the rest of the internet from other ISPs. Some ISPs connect entirely through paid service from other ISPs, where some much larger ISPs have created a pact with other large ISPs to offer the service to each other free of charge. The first is called a “tier 2” or “tier 3” network while the second is called a “tier 1” network.
Politics?
It’s a bit scary to know how many hands your data passes through every time you search for something on Google or even check your email or the weather. As your data passes from your device to its destination, it may pass through any number of ISP-owned servers. This is especially important in cases of data sanctioning, for example, the “great firewall” in China. Because so few actors have put in the effort to build this international peering network, their clientele is completely at their mercy with regards to data rates, firewalls, and man-in-the-middle spam/advertisements. Treaties and laws on the national and international level levels have been discussed and put into place in an effort to diminish the power of these companies, but the fact remains that in most parts of the world, internet service is provided by a small handful of ISPs or even just one in rural or less wealthy areas.