Interfaces in C# define a set of methods that classes must implement. This allows different classes to be used interchangeably through the interface type. For example, Dog and Cat classes implement IAnimal interface with Speak method. We can assign a Dog or Cat object to an IAnimal variable and call Speak without knowing the exact class. This makes code flexible and consistent. The execution trace shows creating Dog, calling Speak outputs Woof, then switching to Cat and calling Speak outputs Meow. Using interfaces helps swap implementations easily and ensures classes follow the same method contract.