Scalability in application development is crucial because it determines an application's capacity to handle increased workloads. As user demand grows or data volume increases, a scalable application can adapt without requiring a complete redesign. This flexibility not only improves performance but also ensures cost-efficiency. Organizations can maintain high levels of user satisfaction and function smoothly during peak loads, preserving business continuity. Scalability can be achieved through various strategies, including optimizing code and leveraging cloud infrastructure.