In this video the transition from working with notebooks to Python modules is discussed. Notebooks are documents with cells that can contain text or code, allowing for quick iterations and interleaving of code and images. Python modules, on the other hand, are text files containing Python code that can be run individually. They do not show results unless explicitly printed, and they can import functions from other modules to build more complex software. The video explains how modules work, including how to import them, load methods into memory, and execute statements conditionally using a hidden variable called "name". This allows for differentiation between running a module directly and importing it into another file.