Data mining refers to extracting hidden patterns from large databases and is a step in the Knowledge Discovery in Databases (KDD) process. KDD is the broader process of finding knowledge within data and involves data preparation, pattern analysis, and knowledge evaluation. It is needed due to the impracticality of manually analyzing large, complex databases. The KDD process includes understanding goals, data selection, preprocessing, mining, pattern recognition, interpretation, and discovery. Examples of applying KDD include grouping students, predicting enrollments, and assessing student performance.