Error boundaries are special components in Next.js that catch errors happening inside their child components during rendering. When an error occurs, instead of the whole app crashing, the error boundary catches it and switches to a fallback UI, like a simple error message. This way, users see a friendly message and the rest of the app keeps working. The execution flow starts with rendering child components. If no error happens, normal UI shows. If an error happens, the error boundary catches it, sets a state variable to show fallback UI, and the app continues running without crashing. This is important to keep apps stable and user-friendly.