The lac operon contains three genes - lacZ, lacY, and lacA - that are transcribed together and encode proteins involved in lactose metabolism. The operon contains regulatory sequences including a promoter where RNA polymerase binds, an operator where the lac repressor binds to block transcription, and a CAP binding site where the catabolite activator protein binds to promote transcription when glucose levels are low. The lac operon is expressed only when lactose is present and glucose is absent, regulated by the lac repressor and CAP in response to lactose and glucose levels.