Socket.IO enables real-time bidirectional communication between web applications and servers through features like instant messaging, chat, and document collaboration. It uses the WebSocket protocol for modern browsers and falls back to other technologies for older browsers, making it transport independent. Socket.IO has both server-side and client-side libraries so real-time updates can be sent from the server to all connected clients. An example is an input box where any text entered will instantly update a label for all users except the one typing.