Multithreading allows a processor to execute multiple threads concurrently. It is achieved through frequent context switching between threads, where the state of one thread is saved and another is loaded on an interrupt. This gives the appearance that all threads are running in parallel through multitasking. In Python, a thread is a sequence of instructions that can run independently within a process. Multiple threads can exist within a Python process and share global variables and code, but each has its own register set and local variables. The threading module is used to create and manage threads in Python.