pgvector is a Postgres extension for vector similarity search that provides efficient and accurate similarity searches in AI-powered applications. It uses the Inverted File Index (ivfflat) for approximate nearest neighbor (ANN) search, which performs better than sequential table scans on large datasets. By creating an index with ivfflat and tuning its parameters, such as lists and probes, users can balance search speed and recall to achieve optimal performance for their specific use case and dataset. The extension is particularly useful for prototyping AI-powered applications, given its popularity among developers.