Euler's method is a numerical approach for approximating solutions to differential equations. It works by taking an initial condition and using the tangent line at that point to take a small step to a new point. This process is repeated, using the new point as the initial condition. The smaller the step size, the more accurate the approximation will be. An example walks through applying Euler's method to the differential equation y' = x + y with an initial condition of y(0) = 2 using 10 steps of size 0.1. Real-life applications like estimating future values of US national debt based on past growth rates are also discussed.