Bubble sort is an algorithm that sorts a list of numbers by repeatedly swapping adjacent elements that are out of order. It works by comparing adjacent elements and swapping them if they are in the wrong order, "bubbling" the largest values to the end of the list over multiple iterations. The algorithm iterates through the list N-1 times, where N is the number of elements, to fully sort the list. It uses pairwise comparisons and swapping to move the largest remaining value to its correct place with each pass.