Short answers, pulled from the story.
The three-world model is a framework of political analysis that divided the world's nations into three groups during the Cold War: the First World (capitalist, Western Bloc nations led by the United States), the Second World (communist, Eastern Bloc nations led by the Soviet Union), and the Third World (countries not closely aligned with either side).
French demographer Alfred Sauvy coined the term "Third World" in 1952. He drew the concept from the three estates of pre-revolutionary France, comparing the capitalist world to the nobility, the communist world to the clergy, and the unaligned nations to the third estate.
First World countries were characterized by economic prosperity, technological advancement, and political stability. Second World countries were characterized by state-controlled economies and centralized political structures.
NATO was created by the United States and formed the basis of the Western Bloc, or First World. The Warsaw Pact was created by the Soviet Union and formed the Eastern Bloc, or Second World. These two alliances were the organizational foundations of the three-world division.
The three-world model became obsolete with the fall of the Soviet Union in 1991. When the Soviet Union collapsed, the Eastern Bloc ceased to exist, removing the conditions that made the model applicable.
Winston Churchill's "Iron Curtain" speech is recognized as marking the onset of the Cold War. In the speech, Churchill described the division between West and East as so solid it could be called an iron curtain.