Apache Spark is a cluster computing framework that allows for fast, easy, and general processing of large datasets. It extends the MapReduce model to support iterative algorithms and interactive queries. Spark uses Resilient Distributed Datasets (RDDs), which allow data to be distributed across a cluster and cached in memory for faster processing. RDDs support transformations like map, filter, and reduce and actions like count and collect. This functional programming approach allows Spark to efficiently handle iterative algorithms and interactive data analysis.