Ngrok is a reverse proxy tool that enables developers to showcase their locally running web services to others without deploying them to a server, making it highly useful for demonstrating projects at hackathons or sharing app progress with clients. The process involves downloading, unzipping, and launching ngrok for your operating system, which is demonstrated for both macOS/Linux and Windows users. To use ngrok, you need a locally running server, which can be set up with a simple Sinatra "Hello, World" app, and then ngrok exposes this service by specifying the protocol and port, with Sinatra defaulting to port 4567. This straightforward setup allows developers to share their work quickly and effortlessly.