The delay() function in Arduino stops the program from running for a set number of milliseconds. In the example, the LED turns on, then delay(1000) pauses the program for 1 second while the LED stays on. After the delay, the LED turns off, then delay(1000) pauses again for 1 second. This cycle repeats forever. During delay, no other code runs, so the program is paused completely. After delay finishes, the program continues with the next instruction immediately. This behavior is shown step-by-step in the execution table and variable tracker.