User Acceptance Testing (UAT) involves actual software users testing a system in real-world scenarios to ensure it meets requirements and solves users' problems. UAT occurs after functional, system, and regression testing and validates that a system works for users as intended. During UAT, users document any issues found and developers fix bugs to prepare the system for release. UAT focuses on validating user experience rather than just finding defects and is important for demonstrating a system supports business needs in a real world environment.