Refactoring is a technique for restructuring existing code without changing its external behavior. It involves reorganizing code to improve factors like design, readability, and maintainability. Some reasons to refactor include removing duplication, improving design, reducing complexity, and decreasing technical debt. Refactoring should be done incrementally with unit tests to ensure changes don't introduce bugs. It involves techniques like extracting methods, simplifying conditionals, and improving names. Refactoring helps keep code healthy and manageable as a project evolves over time.