Simpson's Paradox occurs when a trend appears in different groups of data but disappears or reverses when the groups are combined. This can lead to misleading conclusions if one does not consider the underlying subgroups. For example, a treatment may seem effective in both men and women, but when combined, it appears ineffective. This paradox highlights the importance of analyzing data carefully, especially in fields like statistics and social science. It serves as a reminder that aggregate data can mask important differences between subgroups, such as gender, age, or ethnicity, leading to incorrect interpretations of the results.