Microservices architecture involves decomposing an application into smaller, independent services that communicate with each other. This helps tackle complexity issues that arise in monolithic architectures as applications grow. Each service focuses on doing a small task and can be developed, deployed and scaled independently. While this improves agility, microservices architectures also introduce new challenges around distributed systems, data management and testing across services. Refactoring existing monolithic applications into microservices can help reduce technical debt over time.