Smart contracts in the context of blockchain technology are self-executing contracts with the terms of the agreement directly written into code. They automatically enforce and execute contractual agreements when predefined conditions are met, eliminating the need for intermediaries. This feature enhances efficiency, reduces costs, and minimizes disputes. Additionally, smart contracts operate on decentralized networks, which increases transparency and security. Use cases include financial transactions, supply chain management, and legal agreements, making them pivotal in various blockchain applications.