In unsupervised learning, a deep learning model is handed a dataset without explicit instructions on what to do with it. The training dataset is a collection of examples without a specific desired outcome or correct answer. The neural network then attempts to automatically find structure in the data by extracting useful features and analyzing its structure.
Unlike supervised learning, unsupervised learning removes the "cheat sheet" entirely. You hand the algorithm a pile of raw data (observational data) and it has to figure things out on its own — no correct answers, no labels, no guidance on what to look for.
Why use it? Two main reasons:
Simple analogy: Imagine dumping a box of mixed foreign coins on a table. Even if you've never seen these currencies before, you'd naturally start grouping them — by size, color, or markings. You're finding structure without being told what to look for. That's unsupervised learning.

The model looks for data points that are similar to each other and groups them together. For example, looking at a collection of bird photos and separating them roughly by species based on cues like feather color, size, or beak shape — without being told what species exist beforehand.
The model identifies outliers or unusual patterns in a dataset. For example, banks use this to detect fraudulent transactions — if the same credit card is used in Canada and Denmark within the same day, that unusual pattern gets flagged.
The model finds features that tend to appear together. For example, when an online shopping cart contains diapers and applesauce, the site recommends a bib and baby monitor — because those items are commonly associated with each other in the data.
The model compresses input data into a simplified code, then tries to reconstruct the original data from that code. Think of it like summarizing a book into notes, then trying to rewrite the book from only those notes. A practical use: by training on both noisy and clean versions of an image, autoencoders can remove noise from photos, videos, or medical scans to improve quality.
AI Can Now Fix Your Grainy Photos by Only Looking at Grainy Photos | NVIDIA Technical Blog