An s-t cut is a partition of the vertices of a flow network into two disjoint subsets, one containing the source vertex 's' and the other containing the sink vertex 't'. The capacity of an s-t cut is defined as the sum of the capacities of the edges that cross from the source set to the sink set. This concept is fundamental in determining the maximum flow that can be achieved in a network, as it highlights the limitations imposed by the edges connecting these two vertices.