Data sharding is a method used in databases to improve performance and manage large datasets. It involves breaking up a large database into smaller, more manageable pieces called shards. Each shard contains a subset of the data, allowing for faster access and processing since multiple shards can be handled simultaneously. This technique is particularly useful for applications that experience high traffic or require quick data retrieval. By distributing the data across different servers, data sharding helps balance the load and enhances the overall efficiency of the system, making it easier to scale as the amount of data grows.