Mercurial is a modern, open-source, distributed version control system. You may have heard of git, which is somewhat more popular today; git and Mercurial are very comparable and offer mostly similar functionality.
Developers use Mercurial to keep track of changes to the source code of their applications. It can be used to keep track of changes to any directory of files, although, like most source control systems, it does best when those files are text files (as opposed to binary files). Mercurial also allows multiple developers to work on the same directory of source code simultaneously, and it manages the process of keeping track of each developer’s changes and then merging those changes.