Natural language processing (NLP) involves using computers to process and analyze large amounts of natural language data. There are two main components of NLP - natural language understanding, which is analyzing language input to derive meaning, and natural language generation, which is producing output language from an internal representation. The key steps of NLP are lexical analysis, syntactic analysis, semantic analysis, and pragmatic analysis, which respectively involve examining words, sentence structure, literal meaning, and full context and intent. NLP is a difficult task that requires understanding language at different levels of abstraction.