Licensing involves a contractual agreement between a licensor and licensee where the licensor grants permission to the licensee to use certain intellectual property or technologies. Key terms of a licensing agreement specify the territory, time period, and scope of use being licensed. There are different types of licensing including patent, trademark, and copyright licensing. Licensing provides benefits like quick market access and risk reduction for small companies, but also disadvantages like creating future competitors and limited control over the licensed intellectual property.