JWT is an open standard used for securely transmitting data between parties as JSON objects. It allows for stateless authentication by encoding user login data into a JWT token sent to the client from the server. A JWT contains a header describing the signing algorithm, a payload with user data, and a signature to verify authenticity. The signature is created by hashing the header and payload with a secret key. This workshop example project demonstrates how to create and verify JWTs to authenticate users in a stateless manner on the client side.