A system error memory dump file is a file created by an operating system when a computer encounters a serious error, often referred to as a blue screen of death (BSOD) in Windows systems. This file captures the contents of the computer's memory at the time of the crash, which can help diagnose the cause of the error. These memory dump files can vary in size and detail, with options like small memory dumps and kernel memory dumps. They are useful for developers and IT professionals to analyze system failures and improve software stability by identifying bugs or hardware issues.