What is phantom power?

Phantom power is 12 to 48 volts DC (typically 48V) applied to pins 2 and 3 of a condenser microphone's XLR connector to power the microphone's electronics.  Pin 1 (shield) is the ground for the phantom voltage.

All condenser microphones require power to operate. In professional microphones, this power is supplied through the microphone cable via phantom powering. Phantom power is supplied either by

The microphone receives power from, and sends audio to, the mixer through the same cable conductors.

Let's explain this another way. In a balanced microphone cable are two wires (conductors) surrounded by a shield. A DC voltage is applied to those two wires on pins 2 and 3 of the mic's XLR connector. The audio signal uses the same cable conductors that phantom power uses. The audio signal is not affected by the phantom DC voltage since the signal is AC.

Dynamic or ribbon microphones connected to a phantom-power input are protected from damage, theoretically, since the system results in a net zero DC potential across the coil or ribbon. However, if the dynamic or ribbon microphone is unbalanced internally (one side of the coil or ribbon accidentally tied to ground), damage is sure to occur.