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A social media policy is an internal document used by companies to guide employee interactions on social media platforms like Facebook, Instagram, and Twitter. These platforms provide firms with opportunities to engage potential customers and shape their brand identity, but they also pose risks; insensitive posts can harm a company's reputation. The video discusses the importance of social media policies and outlines what a good policy should include. Additionally, the presenters, eFORMS, highlight that they are the largest database for various document types and will provide a link at the end of the video for viewers to create and customize their own social media policy. The video aims to clarify the difference between social media policies and other related documents.