The Wumpus World is a cave-based environment used for teaching artificial intelligence, featuring a player agent exploring rooms filled with hazards like a Wumpus and pits while trying to collect gold. The player receives percepts representing various game elements and can perform actions such as moving, turning, shooting, and grabbing gold. The game operates on a point system based on the player's actions, with the goal being to safely retrieve gold and return to the starting position without being killed.