A monad is a design pattern used in functional programming to handle computations and manage side effects in a consistent way. It provides a structure that allows for chaining operations while maintaining context, such as handling values that may be missing or computations that may fail. Monads encapsulate values and provide methods to apply functions to these values while keeping track of the context. In programming languages like Haskell, monads are often used to manage effects like state, input/output, or exceptions. The three main components of a monad are the unit function, which wraps a value in a monadic context, and the bind function, which allows for sequencing operations. This makes monads a powerful tool for structuring complex programs.