RFID technology works by transmitting radio signals via electromagnetic fields, allowing for automatic identification and tracking of tagged objects. These tags, attached to items, can either be powered by the electromagnetic field emitted by the reader (passive tags) or contain their own power source to actively transmit radio waves (active tags). RFID tags store electronically readable information, which can be accessed from several meters away. Unlike barcodes, RFID tags do not require line-of-sight and can even be embedded in objects.

This technology has a wide range of applications across various industries. For instance, RFID tags attached to cars in production allow factories to track their progress along the assembly line. Warehouses use RFID tags to track inventory, such as pharmaceuticals, and livestock can be tagged for easy identification. RFID technology is also used in security, allowing employees to access restricted areas with RFID-enabled ID cards, and it helps automate toll collection for vehicles.

While RFID offers numerous advantages, it also comes with its set of limitations, which will be explored in detail in upcoming sections. This part lays the foundation for understanding the basic functionality and applications of RFID, which will help in evaluating its overall impact on different industries.