American Wire Gauge (AWG) is a standardized system used to measure the diameter of electrical wire. The gauge number inversely indicates the wire's size; a smaller number means a thicker wire, while a larger number indicates a thinner wire. This system helps ensure consistency in wire manufacturing and usage across various applications. AWG is crucial for determining the wire's current-carrying capacity, resistance, and overall performance in electrical circuits. Using the correct gauge is essential for safety and efficiency, as undersized wires can overheat and lead to electrical failures or fires.