Huffman coding is a popular data compression technique that assigns variable-length binary codes to symbols based on their frequency of occurrence, with more common symbols getting shorter codes. It works by building a binary tree from the frequency of each symbol and assigning codes based on paths from the root to each leaf node. This results in more efficient transmission of data compared to fixed-length codes like ASCII by using fewer total bits. While it does not achieve optimal compression like entropy encoding since it uses an integral number of bits per code, Huffman coding is simple to implement and provides good compression for many types of data.