Iterators and generators are essential concepts in Python that facilitate efficient data processing. An iterator is an object that allows you to traverse through a collection of data, such as lists or dictionaries, one element at a time. It implements the __next__() method, which retrieves the next item and raises a StopIteration exception when there are no more items to return. Generators, on the other hand, are a simpler way to create iterators using the yield keyword. They allow for lazy evaluation, meaning values are generated on-the-fly, which is particularly useful for handling large datasets without consuming excessive memory.