Transactions are fundamental to database management systems like SQL Server. They provide a way to group multiple operations together, ensuring that either all operations succeed or none do. Imagine updating multiple tables in a banking system. If one update fails, the entire operation should be rolled back to maintain data consistency. Transactions handle this precisely. A transaction begins with a `BEGIN TRANSACTION` statement and ends with a `COMMIT TRANSACTION` statement if all operations succeed. If any operation fails, you use `ROLLBACK TRANSACTION` to undo all changes made within the transaction. This prevents partial updates and ensures data integrity. Transactions are essential for maintaining data consistency in applications that involve multiple database operations, such as financial transactions, order processing, or inventory management. They are crucial for preventing data corruption and ensuring that the database remains in a valid state at all times.