Left factoring is a technique used in grammar design to remove ambiguity by extracting common prefixes from alternatives. The process starts by identifying common prefixes in grammar rules. When a common prefix is found, it is extracted and a new rule is created for the differing suffixes. This rewriting continues until no common prefixes remain, resulting in a left factored grammar that is easier for parsers to handle. For example, the rule A -> a b c | a b d is rewritten as A -> a b A' and A' -> c | d, factoring out the common prefix 'a b'. This process ensures the grammar is unambiguous and suitable for top-down parsing.