Nmap is a security tool used to discover hosts on a network, the services running on them, and operating system details. It performs host discovery using ping scans, port scanning to identify open ports and services running, and OS detection using TCP/IP fingerprinting. Nmap sends crafted packets and compares the responses to fingerprints to determine the likely OS. It has options for different scan types, port ranges, and detection methods and provides insights into network security and available services.