IX is an internet exchange that provides an environment for peer-to-peer connections between the networks of Internet service providers (ISPs) and content providers to allow the exchange of traffic between them. It is also sometimes called an IXP (Internet eXchange Point).
Normally, ISPs and content providers that do not have their own connection to the rest of the world purchase service that provides that connectivity, called transit, from a Transit ISP; but this service is expensive.
By peering(1) with each other through an IX, ISPs and content providers can distribute the traffic that goes between them, dividing it among transit services and IXs. This enables both parties to reduce transit costs.
In addition, they are immune to the effects of transit ISP network failures and congestion because they are directly connected to one another through the IX.
Just having a physical connection to the IX does not mean that traffic will flow between operators using the IX. Two parties that are connected to the IX need to configure their routers so that traffic can flow between them through the IX. This is called peering.
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