ZFS is an innovative file system that provides immense storage capacity, data integrity, and simplified administration. It was developed by Sun Microsystems in 2000 and released in 2005. Some key features of ZFS include its ability to detect and correct errors, provide end-to-end data integrity checks, flexibly pool storage devices, and scale to exabytes of data. While it has limitations like a lack of boot support and encryption, ZFS is widely used with Solaris and is being ported to other platforms like Linux and FreeBSD.