Leprosy is caused by Mycobacterium leprae, an obligate intracellular bacterium. It primarily affects the skin and peripheral nerves, causing disfiguring skin sores and nerve damage that can lead to loss of feeling or muscle weakness. There are three main types of leprosy - tuberculoid, lepromatous, and borderline. Treatment involves multidrug therapy with antibiotics, antileprotic drugs like dapsone, and corticosteroids to treat potential reactions.