Digital signal processing (DSP) involves using digital technology to process analog signals. It converts analog signals into digital data that can be manipulated and analyzed. DSP has applications in areas like audio processing, image processing, radar, and mobile phones. The key components of DSP systems are program memory, data memory, a compute engine, and input/output interfaces. DSP emerged in the 1960s and was initially used for applications like radar, sonar, and space exploration. It later expanded into commercial uses with the growth of personal computers and consumer electronics.