Fuzzy logic is a decision-making methodology that manages vague and imprecise information, offering a degree of truth between completely true and completely false. It is flexible, easy to implement, and used in various applications such as anti-lock brakes and auto transmission systems, but it has limitations related to accuracy and requires careful rule setting. Its advantages include dealing with uncertainty and low-cost sensors, while drawbacks involve challenges in validation, verification, and the potential confusion with probability theory.