According to its light paper, Polkadot aims to be a "next-generation blockchain protocol that unites an entire network of purpose-built blockchains, allowing them to operate seamlessly together at scale." I know that sounds like a mouthful, and since this is an ELI5 article, we can simplify that definition just a bit. If you only take one thing from this article, remember that Polkadot is a way of allowing different blockchains to work together. In reality, Polkadot has a very ambitious mission and therefore a lot of moving parts. Since this is an ELI5 post, I'll do my best to give you a basic understanding of what Polkadot does and high-level overview of how it works without getting too detailed.
Before discussing how Polkdadot works, I want to give a general overview of why a protocol like Polkdaot is needed. As it currently stands, we have a large number of independent blockchains. Bitcoin Cash has its own blockchain. Ethereum, Hive, and Tezos are also independent blockchains. Although each of those independent blockchains offers great value, the problem is that they can not share value, information, or data with each other. Polkadot is important because it allows independent blockchains to communicate and interoperate with each other.
Not only does Polkadot allow different blockchains to communicate with each other, but it preserves the sovereignty of each individual blockchain and allows them to be custom built for specific purposes. For example, I can build a logistics management oriented blockchain using Polkadot's Substrate framework (discussed later). In and of itself, this is useful, but lets suppose that I want to order my supplies based on predicted prices in the commodities market. With Polkadot, my logistics management blockchain can "talk" to my pricing chain to exchange information.
One of the key advantages is that with Polkadot, each sovereign blockchain can be custom built for a specific purpose while still retaining the ability to communicate with other chains. In other words, my logistics chain can be optimized for logistics while my pricing chain can be optimized for pricing. Because Polkadot allows chains to be customized, it has the potential to be far more efficient than simply forcing different types of applications to be built on one general purpose chain.
How Polkadot Works
Polkadot can best be thought of as a giant ring (The Relay Chain) that connects multiple different blockchains attach to. The underlying Relay Chain provides security for the network and allows interoperability while each connected chain has a certain role to play.
Remember that Polkadot connects many different chains which may have their own consensus mechanisms, reward systems, and design parameters, so how does Polkdot ensure that they can all work together? Each independent chain connects to Polkdadot's Relay Chain (the circle in the diagram) through a "slot". A slot can be thought of a connection port or docking station in which an independent chain connects to Polkadot's relay chain.
Although chains connect using a "slot", they can't simply send data and transactions directly into the relay chain. Rather, "collators" are responsible for taking data from the independent blockchains and "translating" this data into a block proof that can be accepted by Polkadot. The beauty of this system is that each blockchain is free to have its own consensus mechanism, token standard, rewards system, block time, block size, and so on while still retaining the ability to be compatible with the underlying relay chain. Note: pre-existing chains such as Ethereum/Tezos/etc that are not natively compatible with Polkadot can still connect to the relay chain through the form of a "bridge" but are still capable of enjoying full interoperability.
After a collator produces a proof for submission, it is validated by actors called "validators" and prepared for eventual inclusion on the relay chain.
Clearly, there is a benefit in allowing different blockchains to work together, but trying to bring together such a diverse set of chains is bound to be a complex matter. Polkadot has several features that make this simpler. First, it has its own "Substrate" framework that it claims is a "plug and play" way to develop a customized blockchain. Not only does Substrate allow people to develop their own blockchain without having to re-invent core pieces of code, any blockchain built with Substrate is compatible with the underlying Polkadot protocol by default.
The underlying Polkadot infrastructure, and chains built with Substrate, are designed with a governance system that allows upgrades without the need for forks. In my opinion, this is a major benefit as each time a chain forks, the momentum and support of the chain is split among the chains. For example, look at the price difference between BCH, BTC and BSV which are all forks of the same coin.
Because the chains connect to the underlying Relay Chain, Polkdaot is able to provide "pooled security" in which each independent chain is able to rely on the security provided by the underlying validators on the Relay Chain instead of having to come up with its own set of validators. This is an important consideration as small chains with low hash rates or few stakers can mitigate the possibility of attack by relying on the security provided by the underlying Relay Chain. Note - this does not apply to existing chains like Ethereum or Bitcoin that would connect to Polkadot via a bridge. Existing chains are responsible for their own security.
DOT is the native cryptocurrency of the Polkadot protocol and serves three primary use cases. First, DOT is used as a governance token in that DOT holders are responsible for managing upgrades and voting on proposals. In order to become either a validator or a nominator (actors that choose validators) participants must stake DOT. The third, and in my opinion one of the most important uses for DOT is for "bonding" and securing a slot on the relay chain.
There are a fixed number of slots on the relay chain which means that as Polkadot grows, more and more chains will compete for a limited number or relay slots. This will likely increase the demand for DOT as chains try to outbid each other for the limited number of slots for inclusion on the relay chain.
To recap, Polkadot is a protocol that seeks to allow different blockchains to work together. It does this by allowing existing chains and Substrate-based chains to connect to a common Relay Chain through the use of "slots". DOT is the native token and is used for governance, staking, and bonding so secure slots on the Relay Chain.
As the title indicates, this article is a VERY basic intro to Polkadot and barely scratches the surface of what the protocol can do and how it does it. I tried to find a good balance between, completeness, accuracy, and simplicity, but I didn't mention anything about the GRANDPA/BABE hybrid consensus mechanism, parathreads, or even how a block is added to the Relay Chain once the collators and validators have done their work. If you are interested in learning more about Polkadot and how it works, consider starting with their light paper.