Elastic Transcoder is an AWS service that converts media files stored in S3 into different formats. It has four components: jobs which perform transcoding, pipelines which are queues for jobs, presets which contain transcoding settings, and notifications. The presenter outlines the service highlights of being easy to use, cost effective, secure, and allowing seamless delivery. They then describe the steps to transcode a video on AWS which includes creating S3 buckets and a pipeline, adding jobs, and retrieving the output file.