NFC is a short-range wireless technology that allows data transfer between devices in close proximity using magnetic field induction. It works by having one device with an NFC reader/writer and another with an NFC tag. Benefits include communication between multiple devices in a small area without needing special software. Applications include social networking, contact sharing, payments, and identity documents. While it has a short range and supports encryption, its data transfer rate is smaller than Bluetooth and it provides no protection against data modification or eavesdropping.