A package in Java is a grouping of related classes and interfaces that provides namespacing to avoid naming conflicts. There are two types of packages: predefined packages provided by Java and user-defined packages. Packages provide advantages like reusability and better organization. Some key predefined packages include java.lang, java.io, java.util, java.applet, and java.awt. To define a user package, include the package statement as the first line in a Java source file, which specifies the package name. Classes in that file will belong to that package.