XOR, or Exclusive OR, is a fundamental logical operation that produces a true output only when an odd number of its inputs are true. In the context of digital circuits, XOR gates are widely used to perform binary addition and error detection. XOR is particularly significant in machine learning, especially in the context of decision boundaries. The XOR problem is a classic example demonstrating that linear classifiers struggle to separate classes that are not linearly separable. Understanding XOR helps in developing more complex models, such as neural networks, capable of capturing non-linear relationships in data.