Sikuli is a tool for automating testing on mobile devices through image recognition. It allows testers to write scripts using images of the screen rather than coordinates or IDs. The speaker discusses how Sikuli addresses issues with traditional mobile testing approaches by being neither too visual, new, or old. Sikuli strikes a balance by using image recognition to automate tests across emulators and real devices without relying on fragile elements like coordinates or IDs that can change between builds.