Huffman coding is a lossless data compression algorithm that uses variable-length binary codes for characters based on their frequency of occurrence, with more common characters represented by shorter bit sequences; it constructs a Huffman tree by assigning codes to characters such that the encoded output has minimum expected length, allowing for more efficient data storage and transmission. The document provides an overview of Huffman coding and trees, including an example to demonstrate how character frequencies are used to assign bit codes and compress a sample string from 56 bits to 13 bits.