Three-dimensional (3D) VLSI provides advantages over traditional two-dimensional (2D) VLSI by reducing chip size, power consumption, and signal delay through shorter, more direct interconnects between functional blocks stacked in three dimensions. While 3D VLSI faces challenges such as thermal management and difficulties in design and fabrication, its potential to continue increasing circuit density and transistor counts as predicted by Moore's Law makes it a promising long-term solution as 2D approaches its physical scaling limits.