In CSS, what does the 'padding' property do?

The 'padding' property in CSS is used to create space inside an element, specifically between the content of the element and its border. This property is essential for enhancing the readability and visual structure of web pages, as it allows you to control the amount of space around the element's inner content.

When you increase the padding, you effectively push the content farther away from the edges of the container, which can help improve layout and make elements appear less cluttered. For instance, if you have a div containing text, adding padding will ensure that the text does not sit flush against the div's border, creating a more aesthetically pleasing appearance and better readability.

Other concepts, like adjusting space outside an element, are handled by the 'margin' property. The 'background-color' property specifically targets the color behind the content in the box model, and applying styles to nested elements relates to other selectors or properties, not specifically to padding. Thus, the focus on how padding manages space within an element makes the second choice the correct answer.