A microservice architecture in software development is a design approach where applications are structured as a collection of small, independent services. Each service represents a specific business capability and communicates with others through APIs. This architecture promotes scalability, as individual services can be developed, deployed, and scaled independently. Additionally, it enhances agility in development processes, allowing teams to work on different services concurrently without impacting the entire system. By adopting a microservice architecture, organizations can respond more rapidly to changing requirements and deploy updates more efficiently.