Netty is an asynchronous event-driven network application framework for Java. It provides an asynchronous model with non-blocking I/O based on Java NIO. To create an HTTP server with Netty, one sets up thread pools for handling connections and requests, provides a ChannelFactory and PipelineFactory, and puts it all together with a Bootstrap. The server can then be started to listen for connections. Custom handlers can be added to the pipeline to process requests. Channels are gathered and closed to release resources when the server is shut down. TCP options like keepAlive and noDelay can be configured but their effects should be measured for each application.