The term "programming paradigm" refers to a fundamental style or approach to programming that dictates the way software is developed and structured. Different paradigms provide distinct methodologies, such as object-oriented programming, which emphasizes encapsulating data and behaviors into objects, or procedural programming, which focuses on executing sequences of instructions. Understanding various programming paradigms enhances developers' flexibility in choosing the right approach for different projects, ultimately influencing factors like maintainability, scalability, and performance of the software.