Flask is called a micro-framework because it starts with just the basics needed to create a web app. You create an app instance, define routes with functions, and run the app to listen for requests. When a request comes in, Flask calls the function linked to that route and sends back the response. This minimal approach lets you add only what you need, keeping the app simple and flexible. The execution steps show creating the app, linking a route, running the server, handling a request, and sending a response. Variables like 'app' hold the Flask instance and routes, while functions like 'home' are called on requests. This design helps beginners start quickly and grow their app as needed.