What is Test-Driven Development (TDD) and what are its benefits?

TDD writes tests before implementation following Red-Green-Refactor cycle: Red (write failing test), Green (write minimal code to pass), Refactor (improve code while keeping tests green). Benefits: ensures testability, drives simple design, documents behavior, prevents over-engineering, catches regressions. Challenges: initial slowdown, learning curve, testing external dependencies. BDD (Behavior-Driven Development) extends TDD with business-readable specifications. TDD works best for logic-heavy code; balance with pragmatism.