Natural language processing (NLP) is concerned with interactions between computers and human languages. NLP analyzes text to handle tasks like summarization, translation, sentiment analysis, and topic segmentation. The Natural Language Toolkit (NLTK) is a Python library that provides tools for NLP tasks like tokenization, stemming, tagging, parsing, and classification. Tokenization is the process of splitting text into tokens or chunks. Bag-of-words is an algorithm that encodes text as numeric vectors, representing word presence or absence to allow machine learning on text data. NLP has applications in areas like spam filtering, chatbots, and sentiment analysis.