Terraform is a tool for building, changing, and versioning infrastructure safely and efficiently. The presenter discusses the good, bad, and ugly aspects of using Terraform with Azure. The good includes its simple configuration language and ability to integrate with Azure and automate deployments. The bad includes limitations in its language and some errors being difficult to debug. The ugly involves challenges around managing state files and keeping infrastructure definitions well organized. Overall, Terraform provides benefits but also requires understanding its quirks and handling state carefully.