FDM involves modulating different carrier frequencies with signals, combining the modulated signals into a composite signal, and transmitting that signal over a shared medium. At the receiving end, filters separate the composite signal back into its original component signals by extracting each signal's carrier frequency band. FDM allows for analog or digital signals to be multiplexed by first converting digital signals to analog before modulation. It is commonly used in broadcasting applications where stations can transmit different frequency bands without needing dedicated physical infrastructure for combining/separating the signals.