Arduino is an open-source electronics prototyping platform that allows users to create interactive electronic objects by providing flexible and easy-to-use hardware and software. It uses sensors to take input from the physical world like temperature, light, and motion, and can control actuators to affect physical objects. Some common sensors that can be used with Arduino include accelerometers, force sensors, temperature sensors, potentiometers, hall effect sensors, and light sensors. Components can be purchased from online retailers like makershed.com and adafruit.com to build Arduino projects.