What is a separating funnel? With the help of a diagram explain its use to separate oil and water.

A separating funnel is a funnel that can be used to separate the components of the mixture of immiscible liquids.

To understand this let us perform the following activity.
Kerosene oil and water do not mix with each other and form two separate layers. The mixture separates into two layers according to their densities. The heavier liquid (water) forms the lower layer whereas the lighter liquid forms the upper layer (kerosene). Thus, the water is first collected in the beaker and the kerosene is collected in another beaker.