Tokenization is the process of replacing sensitive data, like credit card numbers, with unique identification symbols (tokens) that retain all the essential information without compromising its security. This method is compliant with PCI DSS requirements as it ensures that actual credit card data is not stored or processed, thus minimizing the risk of data breaches. Tokenization also maintains confidentiality even if part of the data handling system is compromised, as the tokens do not hold any exploitable data.