What is it?
Minimal Viable Product (MVP) refers the the minimum amount that can be produced and still obtain value.
This value does NOT have to come in the form of something released to the public. This can come in closed user testing, in which the value we gain is the feedback we receive. To that end many in the Agile community advocate for the term Earliest Testable Product (ETP), rather than MVP.
Why use it?
Simple answer - It unlocks value earlier
Building a product takes time, and using traditional method means the customer won’t get any value until the end of the big bang release. Using MVP means the customer starts seeing the value from the product far faster
In addition as we gain feedback throughout this helps us insure that what we’re building is also the right thing. Perhaps based on that feedback we may find that actually we only need a simple solution making it both cheaper and taking less time? Or perhaps we find that we can build something that the customer never imagined they needed but could help them immensely?
Further Information (including example)
Henriks Article on MVP - Still the best article I’ve found on the subject and some brilliant examples throughout