Dichotomous keys are tools used to identify unknown items. They work by presenting two choices at each step, narrowing down the options until the item is identified. An example key is provided that uses three steps to distinguish between a ladybug, grasshopper, dragonfly, and housefly based on characteristics like wing coverage and wing position. The document concludes by constructing a sample key to identify strawberries, apples, oranges, and bananas based on color and shape traits.