CSS3 is the latest evolution of Cascading Style Sheets used to style and layout web pages. It introduces features like animations, transitions, and flexbox to enhance interactivity and responsiveness. CSS3 supports media queries, allowing developers to create responsive designs for different screen sizes. It also simplifies styling with features like gradients, shadows, and border-radius. CSS3 is an essential tool for modern web development, enabling visually appealing and user-friendly designs.