Node.js is an event-driven I/O platform built on Google's V8 JavaScript engine. It allows for non-blocking asynchronous programming which solves problems like slow file uploads, long database transactions, and accessing external web resources. It uses an event loop model with callbacks instead of blocking I/O. Popular frameworks that build on Node.js include Connect and Express. While Node.js has advantages like small memory footprint and fast performance, challenges include maintaining large applications with chained callbacks. Future possibilities include coroutines for true concurrency similar to languages like Erlang and Haskell.