A Data Flow Diagram (DFD) is a visual representation that illustrates how data moves through a system. It shows the flow of information between different components, such as processes, data stores, and external entities. DFDs help in understanding how data is processed and where it originates, making it easier to identify potential improvements in a system. DFDs use specific symbols to represent various elements: circles or ovals for processes, arrows for data flow, open-ended rectangles for data stores, and squares for external entities. By mapping out these relationships, stakeholders can gain insights into the system's functionality and ensure that data is handled efficiently and securely.