Classes in Python are a fundamental aspect of the object-oriented programming (OOP) paradigm. They serve as blueprints for creating objects, encapsulating data attributes and methods that define the behavior and properties of those objects. By using classes, programmers can model real-world entities, making code more organized, reusable, and easier to maintain. The class structure allows for the grouping of related variables and functions, promoting a clear and logical organization of code. This approach not only enhances code readability but also facilitates the implementation of design principles such as inheritance and encapsulation, which are key to effective software development.