Dunder methods, also known as magic methods, are special methods in Python that begin and end with double underscores. They allow developers to define how objects of a class behave with built-in operations, such as addition, subtraction, or string representation. For example, the method `__add__` can be implemented to specify how two objects of a class should be added together. These methods enable operator overloading and enhance the functionality of custom classes. Common dunder methods include `__init__` for object initialization, `__str__` for string representation, and `__len__` to return the length of an object. By using dunder methods, developers can create more intuitive and user-friendly classes.