Bayes' Theorem is a mathematical formula that helps us update our beliefs based on new evidence. It combines prior knowledge, or what we already know about a situation, with new information to calculate the probability of an event. For example, if we want to know the likelihood of having a disease given a positive test result, Bayes' Theorem allows us to consider both the accuracy of the test and the overall prevalence of the disease in the population. This theorem is widely used in various fields, including medicine, finance, and machine learning. By applying Bayes' Theorem, we can make more informed decisions and predictions, improving our understanding of uncertain situations.