Modules in Terraform are reusable units of infrastructure code. You write the module once and then call it multiple times with different inputs. Each call creates its own resources based on the inputs provided. This means you can manage similar infrastructure components easily without repeating code. The execution trace shows two calls to the same network module with different CIDR blocks, resulting in two separate virtual networks. Variables track the inputs and resources created at each step. This approach improves efficiency and organization in cloud infrastructure management.