A keyboard matrix is a grid of electrical connections inside a keyboard that detects which keys are pressed. It consists of intersecting rows and columns of wires. When a key is pressed, it connects a specific row and column, allowing the keyboard controller to identify the pressed key by scanning the matrix. This design reduces the number of required wires and simplifies the circuitry, making keyboards more compact and cost-effective. However, matrix layouts can lead to 'ghosting' or 'masking' issues if multiple keys are pressed simultaneously, unless additional circuitry or software is used to prevent such errors.