Fully known as a middle layer or insulating layer, like the name suggests, a mid-layer is meant for insulation and is normally worn between a base layer and an outer layer. Mid-layers are worn so that they are able to trap heat produced by your body and retain it to keep you from freezing.
They are especially important in extremely cold conditions. A mid-layer can be in a form of a synthetic jacket, fleece jacket, sweater or a turtleneck with varying warming and insulating abilities depending on your needs.