SignalR is an ASP.NET library that allows adding real-time web functionality to applications by enabling server code to push content to clients instantly as it becomes available rather than waiting for a client to request new data. It can be used to create a chat hub that allows clients connected via SignalR to send and receive messages in real-time. The example shows setting up a chat hub class and client that uses SignalR to add new chat messages as they are received from the server.