Insertion sort is an algorithm that iterates through an array, comparing each element to its predecessor and swapping the two if out of order, until the entire array is sorted from lowest to highest value. It is more efficient than bubble sort because it requires fewer element comparisons. While slower than quick sort, heap sort, or merge sort for large arrays, insertion sort performs well for small or nearly-sorted data sets due to its simple implementation requiring only O(n) time at best case. Pseudocode and Java code are provided as examples.