Peer-to-Peer is a data transfer protocol which decentralizes the file(s) to be transferred. Rather than the data being served by a dedicated computer or server bank, it is made available directly from personal computers which are offering it. This protocol can be faster, more efficient, and more reliable if well implemented than the traditional retrieval method from dedicated servers.
Software is required to use Peer-to-Peer transfer. There are paid options, but free software for this purpose also abounds. Some popular programs are BitTorrent, uTorrent (which now shows ads that can be objectionable), and Deluge.
The Nuts and Bolts
The torrent program asks what other online clients have, and requests blocks it does not have. The other clients upload these block to that client. Meanwhile, other client ask what blocks this client has, and may request some. These blocks are uploaded to them.
Generally, trackers are not really your friend. They may be harmless, but are still unneeded. However, they are helpful with traditional Peer-to-Peer sharing. Other clients may be manually entered and connected to, but if a tracker is used, this server will keep track of who is online, and serve that list to every active client. This enables one to start participating in a torrent, without needing a list of IP addresses.
In more recent years, Peer-to-Peep torrent programs have begun implementing the DHT protocol. This enables the peer cloud to act as its own tracker. This newer function enables the system to run even more efficiently.
Peer-to-Peer sharing can be a very efficient system. For this reason, some business integrate this into their products. Dropbox is one such company which has started using Peer-to-Peer transfer. This can also be used in an office setting, or by an individual. If for no other reason, one could send an e-mail with a torrent file attached, and the recipient could use that file to download the actual item, which was too large to be attached on its own. However, this is a less efficient use of the protocol. This protocol is also used in the transfer of cryptocurrency like bitcoin and litecoin.
Unfortunately, due to the easy-to-use nature of this, it has taken on a bad name as some people now use it for illegally transferring some files for purposes such as piracy. Since it is decentralized, there is no easy way for law enforcement to stop such transfers.