What is database indexing and why is it important in Rails?

A database index is a data structure that speeds up queries on specific columns at the cost of extra storage and slower writes. Without an index, queries do a full table scan; with an index, they use a B-tree lookup. In Rails migrations: add_index :users, :email or inline: t.string :email, index: true. Always index: foreign keys (Rails 5+ adds these automatically with belongs_to), unique constraint columns (add_index :users, :email, unique: true), and columns frequently used in WHERE clauses or JOINs. Use explain in the console to check if queries use indexes.