Database isolation levels define how transactions interact with each other in a database system. They determine the visibility of changes made by one transaction to other concurrent transactions, helping to manage data consistency and integrity. The main isolation levels are Read Uncommitted, Read Committed, Repeatable Read, and Serializable, each offering a different balance between performance and data accuracy. Higher isolation levels, like Serializable, provide the strictest data consistency but can lead to increased locking and reduced performance. Conversely, lower levels, such as Read Uncommitted, allow for faster transactions but risk issues like dirty reads, where one transaction reads uncommitted changes from another.