Extreme Programming (XP) is an agile software development methodology that emphasizes coding, communication, simplicity, feedback, and courage through its four core values and fourteen guiding principles. The XP development lifecycle consists of release planning and iteration planning phases, focusing on breaking down requirements into user stories and manageable tasks while regularly involving user feedback. Estimation in XP occurs at both the user story and task levels, ensuring effective prioritization, and allowing for flexibility and adaptation based on project needs.