What is the __name__ == "__main__" statement in Python and why is it used?

I'm learning Python and often see the statement if __name__ == "__main__": at the end of Python scripts. I understand it has something to do with how a script is executed, but I'm not sure what __name__ represents or why this condition is necessary.

Can someone explain how the __name__ == "__main__" statement works, when it evaluates to True or False, and why it's considered a best practice? A simple example showing the difference between running a file directly and importing it as a module would be very helpful.