What can be done with it? Simple programs? Python constructs? What tools and techniques does Python provide for such work? Interesting challenges of natural language processing? Pitfalls?

There are several open source Natural Language Processing (NLP) libraries. The most used are:

• Natural language toolkit (NLTK)
• Apache OpenNLP
• Stanford NLP suite
• Gate NLP library

Things one can do with NLTK:

• Natural Language Processing with Python, by Steven Bird, Ewan Klein and Edward Loper is a platform for building Python programs to work with human language data (and is somewhat outdated, but am correcting where necessary)
• Pattern is a mining module for Python. It has tools for natural language processing, machine learning, etc.
• TextBlob provides a consistent API for diving into common NLP tasks. Stands on the shoulders of NLTK and Pattern.