Clustering, or cluster analysis, is a method for partitioning a set of data into similar subsets called clusters, widely applied in areas like business intelligence and image recognition. It operates as an unsupervised learning technique, requiring no class labels, and has various requirements such as scalability and the ability to manage different data types. The document also discusses specific clustering algorithms, including k-means and k-modes, highlighting their computational efficiency, extensions for handling large datasets, and adaptations for different data attributes.