Normalization is the process of structuring a database to minimize redundancy and dependency. It involves breaking tables into smaller, more manageable pieces and defining relationships between them. The goals are to simplify inserts, updates, and deletes while ensuring data integrity and reducing data anomalies. The document describes the three normal forms - first normal form eliminates repeating groups, second normal form removes partial dependencies, and third normal form removes non-key dependencies to isolate data and optimize the database structure.