TDD involves first writing an automated test that fails, then writing just enough code to pass that test, and refactoring the code. The red-green-refactor process ensures code is tested and well-designed. Studies found TDD reduced pre-release defects by 40-90% and increased initial development time by 15-35%, but allowed for faster development long-term by eliminating bugs early. The document demonstrates TDD with a temperature converter in Xcode, starting with failing tests for -40C=-40F and 30C=86F then coding to pass them.