Socket is a combination of IP address and port number used to establish connections between devices on a network. There are two main types of sockets: datagram sockets which use UDP and are not fully reliable, and stream sockets which use TCP and provide reliable transmission. Socket.io is a library that enables real-time bidirectional communication between clients and servers using websockets. It has client-side and server-side components, and is commonly used for building applications with real-time features like chats.