Operator overloading allows redefining the behavior of operators when used with user-defined types like classes. It is done by defining a member function named operator followed by the symbol, like operator+. The code shows overloading the + operator for a Complex number class to add the real and imaginary parts of two Complex objects when using +. This allows calling the addition like c3 = c1 + c2 instead of c1.operator+(c2).