Streams are used in C++ for input/output (I/O) operations. The stream is the central concept of the iostream classes, which handle input from and output to external entities. There are different stream classes for different I/O needs, such as ostream for output streams, ifstream for input streams, and fstream for simultaneous input and output streams. Iterators and algorithms in the Standard Template Library (STL) allow containers like vectors to be used with I/O streams to read from and write to files.