Denormalization involves deliberately relaxing normalization rules to introduce redundancy into a database design in order to improve performance when a fully normalized system is unable to meet performance requirements. It may involve combining relations so they remain normalized but contain null values, or leaving relations in second normal form instead of moving to third normal form. While denormalization can speed up retrievals, it often sacrifices flexibility and slows down updates, making implementation more complex. Normalization is still important, but denormalization may be used after considering performance needs versus these tradeoffs.