Byte-Pair Encoding (BPE) is a method primarily used in natural language processing (NLP) to segment text into more manageable pieces called subwords. This technique is originally from data compression but has been adapted for use in NLP to help machines understand and generate human language more efficiently.

The process of BPE starts by analyzing a large amount of text to find the most frequently occurring pairs of characters (or bytes) and gradually replaces them with a single, new character that doesn't already appear in the text. This merging of frequent pairs continues iteratively, building a vocabulary of common character combinations and ultimately subwords. For example, in English, pairs like "es", "at", and "on" might be merged into single units if they occur frequently enough.

In NLP applications, such as training language models or machine translation systems, BPE helps to tackle the problem of dealing with rare and unknown words. By breaking words into subwords, the model can better handle new words it encounters that weren't explicitly present in its training data. For instance, a word like "unbreakable" might be segmented into "un", "break", and "able", allowing the model to work with these familiar components rather than struggling with an unfamiliar whole.

The use of BPE enhances the model's ability to generalize from its training data to new text in the wild, making it a valuable technique for improving the performance and versatility of language processing systems.