Computations in neocortical circuits are predominantly driven by synaptic integration of excitatory glutamatergic and inhibitory GABAergic inputs. New optical, electrophysiological, and genetic methods allow detailed in vivo investigation of the superficial neocortical layers 2 and 3 (L2/3). Here, we review current knowledge of mouse L2/3 sensory cortex, focusing on somatosensory barrel cortex with comparisons to visual and auditory cortex. Broadly tuned, dense subthreshold synaptic input accompanied by sparse action potential (AP) firing in excitatory neurons provides a simple and reliable neural code useful for associative learning. Sparse AP firing is enforced by strong inhibition from genetically defined classes of GABAergic neurons. Subnetworks of strongly and specifically connected excitatory neurons may drive L2/3 network function, with potential contributions from dendritic spikes evoked by spatiotemporally clustered synaptic input. These functional properties of L2/3 are under profound regulation by brain state and behavior, providing interesting avenues for future mechanistic investigations into context-specific processing of sensory information.