Dictionaries in Python are versatile and powerful data structures that store data in key-value pairs. Each key in a dictionary is unique and immutable, allowing for efficient data retrieval and manipulation. Unlike lists, which are indexed by numerical positions, dictionaries use keys, which can be strings, numbers, or tuples, to access their corresponding values. This makes dictionaries particularly useful for tasks that require quick lookups, such as mapping identifiers to data. With the introduction of Python 3.7, dictionaries maintain the order of insertion, enhancing their usability in various programming scenarios.