Threads provide concurrency within a process by allowing multiple flows of execution. Each thread has its own program counter, registers, and stack. There are two types of threads: user-level threads and kernel-level threads. User-level threads are managed in user space by a library and do not require kernel involvement for context switches. Kernel-level threads are known and scheduled by the operating system kernel, allowing simultaneous execution across multiple CPUs. While kernel threads have better coordination with the OS, user threads have less overhead during context switches.