Dijkstra's algorithm allows finding the shortest path between any two vertices in a graph. It works by overestimating the distance of each vertex from the starting point and then visiting neighbors to find shorter paths. The algorithm uses a greedy approach, finding the next best solution at each step. It maintains path distances in an array and maps each vertex to its predecessor in the shortest path. A priority queue is used to efficiently retrieve the closest vertex. The time complexity is O(E Log V) and space is O(V). Applications include social networks, maps, and telephone networks.