NVM stands for Node Version Manager, which is a tool used to manage multiple active Node.js versions. It allows users to easily switch between different versions of Node.js, which is particularly useful because what might work under one Node.js version is not guaranteed to work for another version of Node.js. NVM is designed to be installed per-user and invoked per-shell, and it works on any POSIX-compliant shell such as sh, dash, ksh, zsh, and bash. By using NVM, developers can install any version of Node.js through a simple command, and it provides a convenient way to manage the complexities of working with different Node.js versions.