Bitbucket is a hosting site for Git and Mercurial repositories that allows for effective collaboration without requiring a centralized server. While Git does not require a central server, it is good to have Bitbucket to host code repositories. Git uses a distributed version control system that allows developers to directly exchange changes and work independently of network access. Benefits of using Git with Bitbucket include free hosting for academic users, the ability to work offline or on planes, and fast branching and merging of code.