In New Relic, Grok parsing is used to extract maximum value out of log telemetry by applying industry standard for parsing log messages. It allows users to search for specific data in their log messages by defining a Grok pattern, which can match various text formats such as numbers, IP addresses, and words. The built-in patterns provided by New Relic enable users to parse certain specified log types with ease, but custom rules can also be created using the Manage Parsing UI. By creating custom parsing rules, users can extract useful information from free-text strings in their logs, making them first-class entities that can be queried in NRQL and used with dashboards and alerts. The Grok Debugger is a handy tool for experimenting with Grok patterns, allowing users to test and refine their patterns before enabling them.