The document discusses sequential circuits and latches. It explains that sequential circuits have memory so their outputs depend not only on current inputs but also on the stored state. Latches are described as basic memory units that can store a single bit. Different types of latches like SR, D, and JK latches are presented along with their truth tables and operation. State diagrams are introduced as a way to represent sequential circuits. The use of latches with an ALU to increment a stored value is given as an example, but the timing issue of when to disable the latches is noted as a potential problem.