The reaction described is the Reimer-Tiemann reaction. When phenol is treated with chloroform ($CHCl_3$) in the presence of aqueous sodium hydroxide ($NaOH$), an aldehyde group ($-CHO$) is introduced at the ortho position of the benzene ring.

1. Mechanism: The reaction proceeds via the formation of an electrophilic intermediate called dichlorocarbene ($:CCl_2$).
2. Product: The major product formed is Salicylaldehyde (2-Hydroxybenzaldehyde).

(Note: If Carbon tetrachloride, $CCl_4$, is used instead of Chloroform, the product is Salicylic acid).