A Finite State Machine (FSM) is a computational model used to design algorithms and systems. It consists of a finite number of states, transitions between those states, and actions that occur based on inputs. Each state represents a specific condition or situation, and the machine changes states in response to external stimuli. FSMs are widely used in various applications, including computer science, automata theory, and software engineering. They help in modeling the behavior of systems like traffic lights, video games, and protocols in networking, making it easier to understand and predict how these systems will respond to different inputs.