Docker is an application that generates container images which allow microservices applications to be developed and run. A container image contains all the dependencies of an application. Microservices break applications into small, independent services that communicate via APIs. Docker is like a web server that runs container code. Containers are the actual application code, while Docker generates the container images and hosts the running containers. Microservices improve scalability and maintainability by separating functions into independently deployable services.