AJAX is a web development technique that allows for asynchronous updating of parts of a web page without reloading the entire page. It uses a combination of technologies like XHTML, CSS, DOM, XML, JavaScript, and XMLHttpRequest. An AJAX engine acts as an intermediary between the user and server, allowing asynchronous data retrieval and updating of specific parts of the webpage without page reloads. This provides a smoother user experience compared to the traditional method of reloading the entire page for every user interaction.