Pollard's rho algorithm is a probabilistic method used for integer factorization, which means breaking down a number into its prime components. It is particularly effective for finding small factors of large numbers. The algorithm uses a random sequence to generate values and applies the Floyd's cycle-finding algorithm to detect cycles, which helps identify factors. The algorithm operates by selecting a starting point and iteratively applying a polynomial function. As the sequence progresses, it checks for repeated values, which can indicate a common factor with the original number. This method is efficient and widely used in cryptography and number theory.