Radix sort is a non-comparative integer sorting algorithm that sorts data by grouping keys based on individual digits. It treats integers as strings of digits, sorting first by least significant digit then by most significant digit in multiple passes. Radix sort runs faster than comparison-based sorting for short keys due to avoiding comparisons, but requires more space and is less flexible since it only works on integer keys. The document then provides a step-by-step example of radix sort to sort a list of 2-digit numbers.