Terraform is a tool for building, changing, and versioning infrastructure safely and efficiently. It uses a declarative configuration file to describe infrastructure and allows incremental changes through a plan and apply process. The document provides an overview of Terraform and demonstrates how to set up a Google Cloud Platform project and deploy a virtual machine instance on GCP using Terraform. It also shows how to output the instance's IP address, upgrade the instance's machine type, attach additional disks, and manage multiple instances with disks using variables and counts.