Normalization is a process that reduces data redundancy and improves data integrity by organizing attributes into tables based on functional dependencies. The document describes normalization through various normal forms including 1NF, 2NF, 3NF and BCNF. An example of a construction company database is used to illustrate the normalization process of taking an initial table in the sample report format and decomposing it into multiple tables in third normal form through identifying and removing dependencies and anomalies.