The robots.txt file informs search engine bots how to crawl and index a website. It is a plain text file placed in the root directory of the site with the URL www.example.com/robots.txt. It allows website owners to block certain pages like login pages, search results, and CSS files from being indexed while still allowing good bots to crawl other parts of the site. Tools like the Google Search Console and SEObook provide robots.txt generators and analyzers to help users create and check their robots.txt files for errors.