WSO2 Carbon is a modular server runtime based on Java and OSGi that provides core reusable components for middleware servers like app servers, ESBs, identity servers, etc. built by WSO2. It allows for agile development through component reuse and provides benefits like cloud enablement, robust architectures, and consistent deployment across on-premises and cloud. Key features include using Eclipse p2 for modular packaging and provisioning of OSGi bundles, and allowing servers to be deployed in different profiles for various roles.