The `str.format()` method in Python is used to format strings by inserting values into placeholders defined by curly braces `{}`. This allows for dynamic string creation, where you can easily include variables or expressions within a string. For example, you can write `"Hello, {}!".format("Alice")` to produce the output `"Hello, Alice!"`. You can also use indexed or named placeholders for more complex formatting. For instance, `"0 is 1 years old.".format("Bob", 30)` will output `"Bob is 30 years old."`. This method enhances readability and maintainability of code by clearly defining where values should be inserted.