Algorithm efficiency refers to how well an algorithm performs in terms of time and space resources. It measures the amount of time an algorithm takes to complete its task as the size of the input data increases. This is often expressed using Big O notation, which categorizes algorithms based on their worst-case performance, helping developers choose the most suitable algorithm for their needs. Another important aspect of algorithm efficiency is space complexity, which evaluates the amount of memory an algorithm uses during its execution. Understanding both time and space efficiency is crucial for optimizing software applications, especially when dealing with large datasets or limited resources, ensuring that they run smoothly and effectively.