Seed data in Rails means writing code in the seeds.rb file to add initial records to the database. When you run the command rails db:seed, Rails loads and runs this file. Each create command adds a new record to the database tables. For example, creating a user, then a product, then an order linking them. The execution table shows each step adding data. Variables like user count increase as records are added. Beginners often wonder why IDs are used to link records; this is because related records must exist first. Running seeds multiple times can add duplicates unless handled. This visual trace helps understand how seed data fills the database step-by-step.