React’s reconciliation is the algorithm behind efficiently updating the DOM when state or props change. When a component’s state updates, React creates a new Virtual DOM tree and compares it with the previous one (a process called diffing). Instead of re-rendering the entire DOM, React identifies the minimal set of changes needed (using a heuristic O(n) algorithm) and applies only those updates to the real DOM. This approach improves performance by avoiding expensive direct DOM manipulations. Keys play a crucial role here—they help React track which elements have changed, been added, or been removed in lists, ensuring stable and predictable updates.