Inheritance in blockchain contracts means one contract (Derived) can use code from another (Base). This lets Derived access variables and functions defined in Base without rewriting them. For example, Base has a variable x and a function setX to change it. Derived inherits Base, so it can call setX and also add new functions like increment to increase x. This saves time and avoids mistakes by reusing code. The execution steps show deploying Base, setting x to 10, then deploying Derived which inherits x starting at 0. Calling setX(5) on Derived updates its x to 5, then increment adds 1 making x 6. Without inheritance, Derived would not have setX and would cause errors. Inheritance promotes code reuse by sharing common code and letting Derived add new features.