A temporal database is a type of database that manages data related to time. It allows users to store and query data that changes over time, capturing historical information as well as current states. This is useful for applications that require tracking changes, such as financial records or employee histories. Temporal databases typically include two types of time: valid time, which indicates when a fact is true in the real world, and transaction time, which shows when the data was stored in the database. By using these time dimensions, users can retrieve data as it existed at any point in time, enhancing data analysis and decision-making.