Serverless computing allows code to be executed without worrying about the underlying infrastructure. Instead of managing physical or virtual servers, developers upload functions to platforms like AWS Lambda or Google Cloud Functions, which execute them automatically when needed. This model is highly scalable and cost-effective, as you only pay for the actual execution time of the code. Serverless is ideal for applications with variable traffic, real-time data processing, and microservices, as it simplifies development and reduces operating costs by eliminating the need to manage servers manually.