Window functions in SQL perform calculations across a set of table rows related to the current row without collapsing them into a single output. Unlike aggregate functions, which return one result for a group of rows, window functions retain individual rows while applying functions like RANK(), ROW_NUMBER(), SUM(), or AVG() over a "window" of rows defined by the OVER() clause. This clause can partition data into groups and define the order for calculations. Window functions are commonly used for tasks like ranking, calculating running totals, moving averages, or performing cumulative calculations, making them essential for advanced data analysis.