The binomial theorem states that the coefficients of terms in an expansion of the form (a + b)n are given by the entries in the nth row of Pascal's triangle. When expanding (a + b)n, the exponent of a decreases by 1 with each term from n to 0, while the exponent of b increases by 1 with each term from 0 to n. The theorem can be used to expand expressions like x - y^5 or 5 - 2a^4.