The VARCHAR data type in SQL is used to store character strings. Unlike the CHAR data type, which reserves a fixed amount of space for each string, VARCHAR dynamically allocates space based on the actual length of the string. This makes VARCHAR more space-efficient for storing strings of varying lengths. For example, storing a short name requires less space than storing a long description. VARCHAR is a widely used data type because it optimizes storage space and is suitable for storing a wide range of text data. It's crucial to understand that the maximum length of a VARCHAR field is limited by the database system. Different databases have different maximum lengths. Always check the documentation for your specific database.