Models are usually compiled into MDL files.
What are compiled MDL files?
Essentially due to this being a weird 2000's era engine compiled MDL essentially is actually a representation of the actual in-mem struct, with some pointers then hooked up after.
Compiled MDL files therefore can be translated back to MDL ASCII in most cases (newer NWN:EE model changes mean some older decompilers may not always work).
Why compile models and not leave them as ASCII?
MDL files can be binary or ASCII, so why not just leave them as ASCII?
Well the reason is speed - the game will have to dynamically compile (read the text/interpret it/output the right memory structure) for every ASCII file loaded by the game. This can be incredibly slow in complex scenarios and for frequently loaded or large models.
A lot of the models in BIF files are compiled for this reason, although may be decompiled with certain tools.
It is highly recommended to compile your models before releasing them to users via. nwsync, hakpacks or vault uploads.
How to Compile
There are a few ways to compile a MDL file, the main ones are using Console Commands which were included in NWN:EE and obviously is the most compatible (as in it is what the game is using). See that page for that information and Models page for further information on other options.