In more detail
It lives in a <script type="application/ld+json"> block and can describe articles, products, FAQs, events and more. Each block names a vocabulary in @context (usually https://schema.org) and a type in @type, followed by that type's properties such as headline, author or datePublished. Several blocks, or a @graph array, can describe several things on one page. Unlike microdata, it does not touch the visible HTML, so it is easy to generate from templates. Only mark up content that is visible on the page.
Why it matters
Valid markup can make a page eligible for rich results such as breadcrumbs, product ratings or event details, although eligibility is not a guarantee. A single JSON syntax error, such as a trailing comma, invalidates the whole block silently, and markup that contradicts the visible page may be ignored or penalised.
Example
<script type="application/ld+json">
{
"@context": "https://schema.org",
"@type": "Article",
"headline": "How DNS works",
"datePublished": "2026-10-01",
"author": {"@type": "Person", "name": "Ada Lovelace"}
}
</script>
See How SEO Meta Tags Work for how it fits with the other head tags.