Clustering is an unsupervised learning technique used to organize unlabeled data into groups of similar objects. It involves finding a structure in data by grouping objects with similar characteristics together into clusters while keeping objects in different clusters dissimilar. Clustering can simplify data, detect patterns, help construct data concepts, and be useful for an unsupervised learning process. It is applied in areas like data mining, information retrieval, text mining, web analysis, marketing, and medical diagnosis to organize large datasets and discover hidden patterns.