Neural networks are a type of machine learning algorithm inspired by the human brain. They are composed of interconnected nodes that process input data and pass signals to other nodes. Neural networks learn by adjusting the weights between nodes during training to minimize errors and improve accuracy over time. Common types of neural networks include perceptrons and multilayer feedforward networks. The history of neural networks began in the 1940s and saw major developments like the perceptron in the 1950s and the introduction of backpropagation in the 1970s, which enabled modern deep learning applications.