HSQLDB is an open source SQL relational database written in Java that conforms to SQL standards. It can be used for development, testing, and deployment. HSQLDB uses in-memory structures for fast operations and supports features like transactions, pooling, and authentication. It consists of an engine, driver, and database manager components. Developers can connect to an HSQLDB database using JDBC and execute SQL statements like creating, inserting, and dropping tables.