The Physical layer represents the most basic connectivity of devices. A network interface card (NIC) hooked up to a hub (regardless of whether any data is being transmitted) is considered to have "Layer 1 Connectivity". Devices that are considered to be Layer 1 devices are things that only rely on physical connections (as opposed to things that require both physical connection and any form of interpreting protocol). These devices include things like hubs, repeaters, cables, etc. It can also be applied to any type of physical specification, like the number of pins, electrical voltages, cable specifications and ratings, and other very simple and basic components of a network. A smoke signal could be considered a layer 1 function.
The physical layer lays the groundwork for the second layer, providing the service of basic connectivity.