Specification by example is a technique that has the following key benefits: less rework, higher product quality, more efficient implementation of changes, and better alignment across roles. It involves deriving system scope from goals, specifying collaboratively using examples, refining the specification, and automating validation to evolve a living documentation system. The document discusses practices for each step, including deriving requirements from goals by asking "why", using workshops and examples to specify collaboratively, refining specifications through iteration, and automating tests from examples to continuously validate the system.