Ext.Direct is a framework that allows for remoting of server-side classes to the client-side as if they were local. It handles ajax requests, json encoding/decoding, and invoking the appropriate callbacks automatically. To set it up, developers download a server-side stack, configure which methods can be remotely called, and include an API descriptor on the client-side. This allows for batching of requests, centralized routing, and compatibility with both direct calls and ajax requests. Implementing a stack involves configuring exposed classes/methods, generating an API descriptor, and building a router to handle requests and responses.