Maxwell's Demon is a thought experiment created by physicist James Clerk Maxwell in 1867 that challenges the second law of thermodynamics. The idea involves a hypothetical creature that can sort particles in a gas into hot and cold categories without expending energy, seemingly violating the principle that entropy, or disorder, in an isolated system should always increase. This concept raises questions about the nature of entropy and the limits of the second law, linking it to information theory and the fundamental nature of thermodynamic processes.