Compatibility Mode is a feature in software applications that allows newer programs to run older files or applications without issues. It adjusts the settings and functionalities to mimic the environment of previous versions, ensuring that users can access and work with their older documents or software seamlessly. This mode is particularly useful for businesses and individuals who rely on legacy systems or older file formats. By enabling Compatibility Mode, users can avoid potential errors or formatting problems that may arise when opening outdated files in modern software, thus preserving their work and maintaining productivity.