Chico UI is an open source frontend development tool created by MercadoLibre that provides reusable HTML, CSS, and JS components to standardize the user interface and speed up development. It was created to streamline MercadoLibre's products and ensure long-term consistency across interfaces. The development process involves analyzing frontend needs, designing interaction patterns, writing code, incorporating feedback, and releasing features for use on sites like Home, Search, Checkout, and MyML.