Semantic versioning is a versioning system used to manage software releases. It consists of three numbers separated by dots, like 1.0.0. The first number indicates major changes that may break compatibility, the second number signifies minor updates that add features without breaking existing functionality, and the third number represents patches or bug fixes. This system helps developers and users understand the nature of changes in a software product. By following semantic versioning, teams can communicate the impact of updates clearly, making it easier to manage dependencies and ensure that software works together smoothly.