Vagrant is an open-source tool designed for building and managing virtualized development environments. It allows developers to create consistent and reproducible environments using simple configuration files. By automating the setup process, Vagrant helps eliminate the "it works on my machine" problem, ensuring that applications run the same way across different systems. Vagrant works with various virtualization providers, such as VirtualBox, VMware, and Docker. Users can define their environment specifications in a file called a "Vagrantfile," which includes details like the operating system, software packages, and network settings. This makes it easy to share development environments with team members or deploy them in production.