ASP.NET is a Microsoft web technology used to create dynamic web applications and services. It allows for server-side scripting, state management, and easy updating of files while the server is running. An ASP.NET file contains HTML, scripts, and other code that is executed on the server before being returned to the browser as plain HTML. IIS (Internet Information Services) is the Microsoft web server that processes ASP.NET files. In IIS, a virtual directory must be created and the project folder shared in order to host an ASP.NET web application.