Merge sort is a sorting algorithm that uses the divide and conquer technique. It divides the unsorted list into halves, recursively sorts the sub-lists, and then merges the sorted sub-lists into a single sorted list. The key steps are dividing, conquering by recursively sorting the sub-problems, and merging the sorted sub-lists. Merge sort has a time complexity of O(n log n) in all cases (best, average, worst) and requires additional storage space.