Identity columns, also known as auto-increment columns, are a crucial feature in SQL databases. They automatically generate unique values for a column, typically used as a primary key. This eliminates the need for manual data entry of unique identifiers and reduces the risk of duplicate values. Identity columns are particularly useful when dealing with sequential data, such as order numbers, product IDs, or user IDs. They are managed by the database system, ensuring that each new row gets a unique value without any intervention from the application. This simplifies data management and improves data integrity. The specific implementation details, like the starting value and increment, can be controlled during the table creation process. This control is essential for maintaining data integrity and ensuring that the generated values align with the application's needs.