A devcontainer.json file is a configuration file that specifies the environment for a VS Code Remote Development environment, including development language and tools, runtime, and additional features such as tool-specific properties and port forwarding. To create a devcontainer.json file, one starts with defining the simplest possible app, then configures tool-specific properties, adds in additional features, forwards ports, and initializes, post-create, and post-start commands. By following these steps, users can create a fully customized and efficient development environment that meets their unique needs.