The HITS (Hyperlink-Induced Topic Search) algorithm, developed by Jon Kleinberg, categorizes web pages into hubs and authorities based on the structure of links; hubs point to many authoritative pages while authorities are linked from multiple hubs. The algorithm computes scores iteratively, with a focus on relevant pages to determine their importance through mutual recursion of authority and hub scores. Unlike Google's PageRank, HITS is query-dependent and processes data at query time, not indexing time.