Hierarchical planning in AI involves breaking down tasks into sub-goals, like going down a street involves multiple steps such as getting up from a chair, opening the door, and pushing the elevator button. Planning at the millisecond level is impractical since it requires knowing all conditions down to the smallest details. Effective planning requires hierarchical structuring to adapt and replan as conditions change, something that remains a challenge in AI as training systems for various levels of representation is complex and not yet fully understood.