Recursion is a method that calls itself, directly or indirectly. It is used to solve repetitive problems like calculating factorials and solving the Towers of Hanoi puzzle. The factorial example shows recursion can be used to calculate N! by defining it as N * (N-1)! and base cases where 0! = 1. Similarly, the Towers of Hanoi is solved recursively by breaking it down into moving all disks but the largest, moving the largest disk, and moving the remaining disks.