Inheritance allows for the creation of derived classes that inherit capabilities from base classes, while allowing the derived classes to add their own unique properties and behaviors. The chapter discusses key inheritance concepts like access specifiers, generalization in UML class diagrams, substituting base class constructors and member functions, protected access specifiers, abstract base classes, public and private inheritance, multiple inheritance, and aggregation. Multiple inheritance can lead to ambiguity if member functions and constructors are not implemented carefully.