Floating-point arithmetic is a method used in computers to represent and manipulate real numbers. It allows for a wide range of values by using a format that includes a sign, an exponent, and a fraction (or mantissa). This representation helps in performing calculations with very large or very small numbers, which are common in scientific computations. However, floating-point arithmetic can introduce errors due to its limited precision. When numbers are rounded or approximated, small discrepancies can occur, leading to inaccuracies in calculations. Understanding these limitations is crucial for programmers and engineers to ensure reliable results in their applications.