Indexes in SQL are special lookup tables that the database search engine can use to speed up data retrieval. They contain a copy of selected columns from the table and pointers to the rows where that data exists. Think of it like an index in a book; it allows you to quickly find a specific topic without having to read every page. When a query needs to find data based on indexed columns, the database can use the index to locate the relevant rows much faster than scanning the entire table. This significantly improves query performance, especially on large tables with frequent queries. Indexes are crucial for optimizing database performance, as they dramatically reduce the time it takes to retrieve data. However, indexes also require extra storage space and can slightly slow down data modification operations (inserts, updates, deletes) as the index itself needs to be updated. Therefore, indexes should be carefully considered and implemented only where they provide a significant performance boost.