Istion is a service mesh. It can be considered as an extra layer of software that you deploy along with Kubernetes.

In kubernetes when one Pod needs to connect to another Pod then service discovery helps but what and how things are running behind the scenes are taken care of by istio.

How istio implements a mesh

The proxy containers are added to each pod where application is running and mesh logic will be added to this container. All the proxy container if combined together they are known as data plane.

Also istiod or istio daemon is a s separate layer that contain istio pods and are also known as control panel. kiali UI pods one of the istio pods are used to check and identify how each of pods are connected to each other.