A linked list is a dynamic data structure consisting of nodes, each containing a data field and a reference to the next node, allowing for efficient insertions and deletions without requiring contiguous memory. There are various types of linked lists, including singly linked lists, doubly linked lists, and circular linked lists, each with unique features and use cases. Applications of linked lists include implementing stacks, queues, and graphs, as well as dynamic memory allocation and functions like undo in applications.