Aggregate functions are powerful tools in SQL for summarizing data. They take multiple rows of data and condense them into a single result. Imagine you have a table of sales data; you might want to know the total sales for a specific period. Aggregate functions allow you to do this without having to manually sum up each individual sale. These functions are essential for data analysis and reporting. They are used to calculate various statistics like sums, averages, counts, maximums, and minimums. For example, you can find the total revenue generated by a particular product category or the average customer order value. They are often used in conjunction with `GROUP BY` clauses to perform calculations on groups of data.