Segmentation is often considered to be the first step in image analysis.In general, autonomous segmentation is one of the most difficult tasks in digital image processing. Otsu’s thresholding chooses the threshold to minimize the intraclass variance of the thresholded black and white pixels.
U can take a look at the links below which are some tutorials providing the basics of OTSU thresholding:
In addition to very good answers already given, there is a bit more to consider. Articles on Otsu's method are available here on RG. A good introduction to Otsu's method is given in
Response by Ranjit is straight-forward but abstract. Otsu's algorithm is more sophisticated way of image thesholding as compared to traditional mean-based split of gray-level image into binary image. This sophistication comes from minimizing the weighted within-class variance and maximizing between-class variance, as quoted by Chethan and Singha.
Even though, Otsu method is quite fast. It has one drawback, it is required uniform illumination which is difficult in practice. You can use it in addition to any other method.