3D models represent a 3D object using a collection of points in 3D space, connected by various geometric entities such as triangles, lines, curved surfaces, etc. Being a collection of data (points and other information), 3D models can be created by hand, algorithmically (procedural modeling), or scanned.
3D models are widely used anywhere in 3D graphics. Actually, their use predates the widespread use of 3D graphics on personal computers. Many computer games used pre-rendered images of 3D models as sprites before computers could render them in real-time.