Kafka is a distributed streaming platform that allows publishing and subscribing to streams of records. It uses a broker-based architecture with replication and partitioning to provide scalability and fault tolerance. Kafka Streams is a library for building stream processing applications that run as lightweight microservices embedded in the applications. It allows stateless and stateful transformations on streams of records using concepts like streams and tables. The demo will showcase Kafka Streams for stream processing use cases like enrichment and aggregation.