Backpropagation is a learning algorithm for multi-layer neural networks, developed in 1969, which adjusts weights based on the error of the output compared to expected results. The process consists of a forward pass to determine output and a backward pass to calculate weight adjustments through gradient descent. Neural networks, which leverage backpropagation, have applications in classification and function approximation, thriving in scenarios with ample training data and where explicit rules are hard to define.