Neural networks are mathematical models inspired by biological neural networks. They are useful for pattern recognition and data classification through a learning process of adjusting synaptic connections between neurons. A neural network maps input nodes to output nodes through an arbitrary number of hidden nodes. It is trained by presenting examples to adjust weights using methods like backpropagation to minimize error between actual and predicted outputs. Neural networks have advantages like noise tolerance and not requiring assumptions about data distributions. They have applications in finance, marketing, and other fields, though designing optimal network topology can be challenging.