In SQL, a transaction is a sequence of one or more SQL statements treated as a single logical unit of work. If any part of the transaction fails, the entire transaction is rolled back, leaving the database in its previous state. This is where the `ROLLBACK` command comes in. It essentially undoes all the changes made during the transaction, restoring the database to its state before the transaction began. This is vital for maintaining data accuracy and consistency, especially in applications where multiple users or processes might be accessing and modifying data concurrently. Imagine an e-commerce system processing an order. If a payment fails, a `ROLLBACK` ensures the order isn't placed, preventing inconsistencies in the inventory and financial records. This is a fundamental concept in database management, ensuring data integrity and reliability.