In React, hooks are special functions that let you use state and other React features. For React to recognize a function as a hook, its name must start with 'use'. This naming rule helps React track hook calls during rendering. For example, a custom hook named 'useCounter' works correctly and React manages its state. If you rename it to 'counterHook' without the 'use' prefix, React will not recognize it as a hook, causing errors or unexpected behavior. Hooks must also be called only inside React function components or other hooks. This ensures React can maintain the correct state and lifecycle. Remember, always start your custom hook names with 'use' to follow React's rules and keep your app working smoothly.