How to set up and configure Webpack in a Node.js project for module bundling and asset optimization?

To set up Webpack in your Node.js project, start by installing Webpack and Webpack CLI, then do the steps below:

1. Create a `webpack.config.js` file in your project root.
2. Define entry points for your application, output paths, and any loaders for processing different file types like CSS, SASS, or Babel for JavaScript.
3. Include plugins for tasks like minification or hot module replacement if you're in development.
4. Run Webpack in your build process, and ensure it’s integrated with your development and production workflows for bundling and optimization.