BCD stands for Binary-Coded Decimal, a method of representing decimal numbers in a binary format. In BCD, each digit of a decimal number is encoded separately using four bits. For example, the decimal number 25 is represented in BCD as 0010 0101, where 0010 represents the digit 2 and 0101 represents the digit 5. BCD is commonly used in digital systems where precise decimal representation is required, such as in calculators and digital clocks. This encoding allows for easy conversion between binary and decimal formats, making it useful in applications that involve human-readable numbers.