AWS CloudFormation allows users to define infrastructure as code to provision and manage AWS resources through templates. It provides features like automated rollouts, visual diagramming, and templates that can be version controlled and code reviewed. The document demonstrates using CloudFormation to create a load balanced web application with a database, and also shows how Packer can be used to create customized AMIs as part of the infrastructure code. Tips are provided around parameterization, reusability, autoscaling, and costs when using CloudFormation.