GlusterFS is a distributed file system that shards and replicates files across multiple servers without a central metadata server. It uses modular "translators" to handle functions like replication and distribution. Some challenges GlusterFS faces include multi-tenancy, distributed quota management, efficient data rebalancing, reducing replication latency, optimizing directory traversal, and handling many small files. The speaker argues these challenges are not unique to GlusterFS and that incremental, modular improvements are preferable to monolithic solutions.