MIME (Multipurpose Internet Mail Extensions) allows for the exchange of rich content beyond plain text in internet messages. It defines a format for describing message content types like text, images, audio and video. MIME uses techniques like character set encoding and base64 encoding to package binary files for transmission over the internet in email and web protocols. It is specified in a series of RFC documents and involves setting the Content-Type in the message header to indicate the MIME type and encoding.