A database management system (DBMS) stores and organizes large collections of data. The DBMS allows users to enter data into tables, query the data, and generate reports. There are two main types of databases - flat-file databases which are simpler but cannot handle large amounts of data efficiently, and relational databases which organize data across multiple tables and allow for more advanced querying and reporting. Working with a database involves defining tables and fields, entering and viewing data, sorting and querying the data, and generating reports from the results.