Linux was initially created as a hobby by Linus Torvalds in 1991 and released in 1994. It is a free and open-source operating system that runs on various platforms and aims for maximum compatibility. The central component is the Linux kernel, which is constantly developed and handles tasks like opening and closing files more efficiently than other operating systems, leading to better speed and stability. Linux excels in areas like stability, speed, ease of use, development, and networking. It can also import and export files between other operating systems.