An entity represents an object in a system that has associated data. Entities can be modeled as tables in a relational database with attributes as fields. A relational database links tables through relationships. Each table contains records about a single entity, with each record as a row containing fields of attribute data. Storing all data in a single flat file leads to problems like data isolation, redundancy, and inconsistency that are avoided through normalization of data across related tables in a relational database. This allows for more efficient querying, data sharing and consistency, security, and productivity across an organization.