Java was developed by Sun Microsystems in 1991 to be portable and used in embedded systems. It uses a two-step compilation process where code is compiled to bytecode that can run on any Java Virtual Machine (JVM). This makes Java portable across different operating systems. The Java API provides predefined classes and interfaces for developing applications. Key capabilities include developing desktop, server-side, and mobile applications. Development tools like Eclipse and NetBeans provide IDEs for rapidly building Java programs.