an Ethernet PHY layer usually refers to the layer that makes digital signals suitable for transmission on the medium (and the inverse for receiving).

Think for example a standard SoC chip for an embedded device scenario - it will have one or more MII ports [1]. Onto these MII ports, you can then attach a PHY chip for your needs... Ethernet, coax, fiber optics, direct connection, whatever, so you don't need to change your SoC chip or even your operating system just if you want to offer a product with Ethernet and fiber networking.

Usually, these chips are proprietary... but this project provides an open source implementation, so that in the worst case of no one producing Ethernet PHYs any more, you can take an FPGA instead.

[1] https://en.wikipedia.org/wiki/Media-independent_interface