A parser is a program component that breaks input data into smaller elements according to the rules of a formal grammar. It builds a parse tree representing the syntactic structure of the input based on these grammar rules. There are two main types of parsers: top-down parsers start at the root of the parse tree and work downward, while bottom-up parsers start at the leaves and work upward. Parser generators use attributes like First and Follow to build parsing tables for predictive parsers like LL(1) parsers, which parse input from left to right based on a single lookahead token.