The position that a person should hold their own identifiers and credentials and decide each time what to disclose. It is a stance about who is in control, not a protocol; decentralized identity is how it gets built.
A DID is a digital identifier. It helps its holder and a verifier establish who controls an identity and who a claim relates to. It is not a wallet, and it does not replace application accounts, sign-in methods, or permission rules.
A verifiable credential is a signed statement from an issuer about a subject. It gives a verifier something more specific to inspect than a screenshot or an assertion passed along without its source.