Optical measurements and first-principles calculations of the band structure and exciton states in direct-gap bulk and few-layer PbI2 indicate that the n = 1 exciton is Frenkel-like in nature in that its energy exhibits a weak dependence on thickness down to atomic-length scales. Results reveal large increases in the gap and exciton binding energy with a decreasing number of layers and a transition of the fundamental gap, which becomes indirect for one and two monolayers. Calculated values are in reasonable agreement with a particle-in-a-box model relying on the Wannier-Mott theory of exciton formation. General arguments and existing data suggest that the Frenkel-like character of the lowest exciton is a universal feature of wide-gap layered semiconductors whose effective masses and dielectric constants give bulk Bohr radii that are on the order of the layer spacing.