DXT, or DirectX Texture Compression, is a technology used in computer graphics to reduce the size of texture data without significantly compromising image quality. It is commonly utilized in video games and 3D applications to optimize performance and memory usage, allowing for more detailed graphics on various hardware. This compression method works by encoding texture data into a format that can be efficiently processed by graphics hardware. DXT is part of the broader DirectX suite developed by Microsoft, which provides tools and APIs for game development and multimedia applications, enhancing the overall visual experience.