The `GROUP BY` clause is a powerful SQL command used to group rows that have the same values in specified columns. This allows you to perform aggregate functions (like `SUM`, `AVG`, `COUNT`, `MAX`, `MIN`) on these groups. Imagine you have a table of sales data. You might want to find the total sales for each region. The `GROUP BY` clause is perfect for this. It groups the sales records by region and then calculates the total sales for each region. This is a fundamental step in data analysis and reporting. It's essential for summarizing data and identifying trends. For example, you could group sales by product category to see which categories are performing best. The `GROUP BY` clause is closely tied to aggregate functions, as these functions operate on the grouped data. Without `GROUP BY`, aggregate functions would operate on the entire dataset, not on the individual groups.