RTOS allows an operating system to provide a bounded response time by prioritizing and scheduling tasks. It handles tasks that must be completed within a specified time delay, like controlling traffic signals. An RTOS manages tasks, scheduling, resource allocation, and interrupt handling. Tasks have states like ready, running, blocked, and tasks transition between these states. The scheduler decides which ready task runs next based on priorities. Semaphores are used to control access to shared resources and avoid data sharing problems between tasks.