FTP stands for File Transfer Protocol and is used for transmitting files between hosts. It establishes two connections - a control connection for commands and a data connection for transferring files. The control connection remains open during an FTP session while the data connection only opens when needed and closes after file transfer. Some key advantages of FTP are its speed, efficiency, security through username/password login, and ability to transfer files back and forth. Disadvantages include a lack of encryption on some providers, file size limits of 2GB, sending passwords and files in clear text, and lack of compatibility with all systems.