The principle of competitive exclusion states that no two species can occupy the same niche in the same habitat simultaneously. If they do, one species will outcompete the other for essential resources such as food, space, or light, leading to the exclusion or extinction of the less competitive species. This principle is vital in ecology as it explains species distribution and community structure. It supports the notion that species must adapt, evolve, or find different niches within an ecosystem to coexist effectively.