Grafana is an open multi-platform observability platform that allows developers to monitor metrics from applications or systems in the cloud. It generates analytics and visualization charts, graphs, and alerts. To integrate Grafana with Vonage for SMS notifications using the Vonage Messages API, a Python application must be created to receive webhook notifications. The application uses Flask and sets up a webhook endpoint to receive POST requests. Ngrok is used to spin up a lightweight server for the application. The application connects with Grafana to send webhook notifications, which are then sent to users via SMS using the Vonage Messages API. The setup includes configuring a Vonage application, defining URLs, sending messages, and testing the application.