Extreme programming (XP) is an agile software development framework that emphasizes customer satisfaction, teamwork, and adaptability to changing requirements. It improves projects through communication, simplicity, feedback, respect, and courage. Key principles include being adaptive to change rather than predictive, focusing on people over processes, and having simple rules like pair programming, test-driven development, and continuous integration. The goal is to empower developers while trimming unnecessary activities to reduce costs and frustrations for all involved.