Data types are classifications that specify the kind of data a variable can hold in programming and databases. Common data types include integers, floating-point numbers, strings, and booleans. Each type determines the operations that can be performed on the data and how much memory it occupies. Understanding data types is essential for effective coding and data management. For example, integers are used for whole numbers, while strings represent text. Using the correct data type helps prevent errors and optimizes performance in applications and algorithms.