Microservices are a software development approach where applications are built as a collection of small, independent services. Each service focuses on a specific function and can be developed, deployed, and scaled separately. This allows teams to work on different parts of an application simultaneously, making it easier to update and maintain. By using microservices, organizations can improve flexibility and speed in their development processes. For example, if a company like Netflix wants to add a new feature, it can do so without affecting the entire application. This modularity helps in managing complex systems and enhances overall performance.