Partial indexes in PostgreSQL allow creating an index on only a subset of table rows that meet a specific condition defined by a WHERE clause. During index creation, each row is checked against the WHERE condition. If the condition is true, the row's indexed column value is included in the index. If false, the row is skipped. This results in a smaller, more efficient index that speeds up queries filtering on the condition. For example, creating an index on last_login for only active users includes only those rows where active is true. Rows where active is false are not indexed. This selective indexing saves space and improves query speed for relevant data.