Acids and bases are classified based on their taste and reaction with indicators. Acids are sour, turn litmus red, and have a pH below 7. Bases are bitter, soapy to touch, turn litmus blue, and have a pH above 7. When an acid and base are mixed, a salt and water are produced through a neutralization reaction where the acid and base cancel out each other's effects. Litmus paper is a common natural indicator that is used to test whether a substance is acidic or basic based on the color it turns - red for acidic and blue for basic.