The Virtual DOM is a concept in React that acts as a lightweight, in-memory representation of the actual DOM. It allows React to efficiently update the real DOM by performing a process called "diffing" or "reconciliation" to identify the minimal set of changes needed. This approach reduces unnecessary DOM manipulations and improves rendering performance. The Virtual DOM offers benefits such as efficient updates, batched updates, cross-platform compatibility, and easier abstraction. By understanding how the Virtual DOM works, developers can write more efficient and performant React applications.