Codominance occurs when two alleles of a single gene produce distinct and detectable gene products, with both alleles expressed equally in a heterozygote. An example is the MN blood group, where the lm allele for m-type blood is codominant with the ln allele for n-type blood, resulting in distinct blood types including m, mn, and n. The document includes multiple-choice questions that reinforce the concept of codominance and its genetic implications.