Edge computing refers to the practice of processing data closer to the source, rather than relying solely on a centralized cloud service. By placing compute resources at the edge of the network, it can significantly reduce latency and enhance the performance of applications, particularly for real-time processing. This architecture is essential for IoT devices and applications that require immediate responses, like autonomous vehicles and smart cities. It enables more efficient use of bandwidth by allowing local data processing, thereby improving response times and reducing the volume of data sent to centralized servers.