The 8051 microcontroller contains a 16-bit timer/counter that can be used for timing and counting applications. The timer/counter can operate in one of three modes - mode 0 counts external events with no prescaling, mode 1 counts external events with a programmable prescaler, and mode 2 generates internal timing pulses for time delay purposes. The timer/counter is a versatile component of the 8051 that allows it to perform tasks that require precise timing or event counting.