Bitbucket is a hosting site for Git and Mercurial repositories that allows for effective collaboration without needing a centralized server. Git is a distributed version control system that stores the full revision history locally and allows developers to directly exchange changes. Benefits of using Bitbucket and Git include being able to work offline or from anywhere, superior branching and merging, and free private repositories for academic users. The typical workflow involves pulling changes, merging, committing changes locally, and pushing updates.