An ETag (Entity Tag) is a unique identifier assigned to a specific version of a resource on the web, such as a file or webpage. It helps web servers and browsers manage caching by allowing them to determine if the resource has changed since it was last accessed. When a browser requests a resource, it can send the ETag it received previously, enabling the server to respond with a 304 Not Modified status if the resource hasn't changed. Using ETags improves website performance by reducing unnecessary data transfers. When the resource is unchanged, the browser can use the cached version instead of downloading it again. This mechanism is part of the broader caching strategy in web development, which also includes other techniques like Cache-Control and Last-Modified headers.