Ki is a fundamental concept of everyday Asian culture or philosophy, most often defined as "air" or "breath" and, by extension, "life force" or simply put, just "energy" that is part of everything that exists.
In regards to the Martial Arts and physical health: The overall effectiveness of ki is directly related to posture, (whether moving or stationary), breathing techniques, and mental focus.
Ki is the conceptual layer of understanding that practitioners place upon the actual physiological activity relating to the movement of the various types of biological or chemical energy within the body. Essentially, using mental focus, relaxation, and posture, practitioners create a link between their mind, and that of their body, through various training methods - in order to become more sensitive to the internal processes taking place throughout their own physical being.
The study of ki is a critical component of aikido, and its study defies categorization as either "physical" or "mental" training, as it encompasses both. The original kanji for Ki is pictured above, and is a symbolic representation of a lid covering a pot full of rice; the "nourishing vapors" contained within are Ki.