Li-Fi is a system of wireless communication that uses light from LED bulbs to transmit data. It was developed as a solution to increasing radio spectrum congestion from the growing number of wireless devices. The document discusses how Li-Fi works by modulating the light intensity of LED bulbs to transmit data. It provides advantages of Li-Fi over Wi-Fi such as improved security since light cannot pass through walls, reduced interference with devices, and greater available bandwidth from light spectrum. Potential applications discussed include using car headlights to transmit traffic information to improve flow.