Code Splitting is the process of breaking down a large codebase into smaller chunks, which can be loaded separately, thus enabling the application to load faster.

React has a built-in mechanism called "React.lazy()" for code-splitting. By wrapping a component with "React.lazy()" and passing a function that returns a dynamic import, the component is loaded when it's needed to be rendered. The dynamic import loads a separate JavaScript file that contains the code for the component.

Code splitting can be utilized for both component-based and route-based splitting. React Router v4+ also provides support for route-based code splitting.

By splitting code, we can reduce the initial load time of our application, which can provide a better user experience. However, it's important to strike a balance between the size and number of code chunks we're splitting, as too many chunks can also have a detrimental effect on performance.

In summary, Code Splitting is an essential technique for optimizing the performance of React applications by reducing their initial load time through selectively loading smaller pieces of code that are needed at different times.