Cisco Packet Tracer is a network simulation software that allows users to design, configure, and test networks virtually. It provides benefits for both instructors and students by making networking concepts more visual and hands-on. Key features include simulating network devices and protocols, visualizing network traffic, authoring activities, and enabling multi-user collaboration. Packet Tracer supports Cisco Networking Academy curricula and the latest version adds enhancements like improved wireless security and VOIP support.