The Carnot Cycle is a theoretical model that describes how heat engines operate with maximum efficiency. It consists of four stages: two isothermal processes, where heat is absorbed and released at constant temperature, and two adiabatic processes, where the gas expands and compresses without heat exchange. This cycle helps us understand the limits of efficiency for real engines. By analyzing the Carnot Cycle, we can see that no engine can be more efficient than one operating between two heat reservoirs at different temperatures. This principle is crucial for improving the design of engines and understanding the second law of thermodynamics.