Mule clustering allows multiple Mule instances to act as a single unit. A cluster shares data through distributed memory across nodes, which can reside on the same or different machines. The document demonstrates setting up a two-node Mule cluster on the same machine by running two standalone Mule servers and registering them with a cluster manager. Key steps include starting the servers, viewing them in the server tab, creating a new cluster called Anirban_Cluster, adding both nodes to the cluster, and verifying the cluster is formed with both nodes listed.