Conditional GET requests allow APIs to check if content has changed before returning it. If the content has not changed, the server returns a 304 status instead of the full response. This improves performance by avoiding unnecessary data transfer. Rails supports conditional requests using ETags and the Last-Modified header to check if content is stale or fresh based on modification timestamps or signatures of the content. If the request is fresh, Rails returns a 304 status, otherwise it returns the full response.