A data flow diagram (DFD) is a visual representation that illustrates how data moves through a system. It shows the flow of information between processes, data stores, and external entities, helping to clarify how data is processed and transferred. DFDs use standardized symbols, such as circles for processes, arrows for data flow, and open rectangles for data stores. DFDs are useful in various fields, including software engineering and business analysis, as they help stakeholders understand system requirements and identify potential improvements. By mapping out data interactions, DFDs facilitate better communication among team members and provide a clear overview of complex systems.