ngrok is a free tool that enables developers to expose their local web applications on localhost to the internet, allowing them to test and develop webhooks with services like Twilio. To use ngrok for local Twilio development, one needs to download it, write a simple web application that responds to inbound calls or texts in TwiML format, start ngrok to expose the local web app's port to the public internet, and configure Twilio to hit this URL when an incoming call or text is received. With ngrok, developers can easily test and develop their Twilio applications locally without relying on cloud-based services.