A tensor is defined as a mathematical object that transforms according to specific rules, making it a generalization of vectors and scalars. Scalars are rank 0 tensors, while vectors are rank 1 tensors, and higher rank tensors, such as dyadics, represent more complex relationships involving multiple dimensions. Physical quantities that vary in multiple directions, like stress and strain, are described as tensors, with the moment of inertia being a classic example due to its dependence on both the axis of rotation and the position of the center of mass. The discussion emphasizes that all physical quantities can ultimately be categorized as either vectors or scalars, with tensors providing a more comprehensive framework for understanding multidimensional properties. Understanding tensors is crucial for applications in fields like acousto-optics and medical imaging.