The "inline-block" display property in CSS allows elements to sit next to each other while still respecting their width and height. Unlike "inline" elements, which only take up as much width as their content, "inline-block" elements can have set dimensions, making it easier to align them in a row without breaking the flow of text. This property is useful for creating layouts where you want elements, such as buttons or images, to be displayed side by side while maintaining their individual box model properties. It combines the characteristics of both block and inline elements, providing flexibility in design.