Codd's rules define the requirements for a database management system to be considered relational. Codd proposed 12 rules that relate to data storage, relationships, and access in relational databases. Relational database management systems like SQL Server aim to satisfy Codd's rules by storing data in tables that are related through keys and indexes, allowing data to be easily accessed and without redundancy. While no commercial RDBMS fully complies with Codd's 12 rules, they set standards for relational database design and operation.