The Panels module allows a site administrator to create customized layouts for multiple uses. At its core it is a drag and drop content manager that lets you visually design a layout and place content within that layout.
Integration with other systems allows you to create nodes, sophisticated section indexes and landing pages that use panels, and even override system pages such as taxonomy and the node page so that you can customize the layout of your site with very fine grained permissions & behavior.
Panels can also dynamically control arguments going into blocks, passing variables like user names into blocks. Panels streamlines the creation of complex Drupal pages by letting site developers combine views, blocks, and other system elements (like the site slogan or logged-in user pictures).
Panels 3 is the most recent version of Panels, and is a significant advance over Panels 2, although its user interface is similar. A non-final release of Panels 3 is available for Drupal 7.
Panels 2 for Drupal 6 is deprecated. See Upgrading from Panels 2 to Panels 3 if you are currently using Panels 2 on Drupal 6.
Many useful Panels videos have been created by Drupal community members.