Photoshop is image editing software created by Thomas Knoll in 1987. It contains various tools for selection, painting, and editing images organized in a toolbar. Key tools include selection tools like the marquee and lasso tools, painting and editing tools like the brush and crop tools, and tools to work with layers and colors. Photoshop allows users to open, edit, and save images in various formats like PSD, JPEG, and TIFF. Images can be created or modified using layers, tools, and options like adding text.