Smart contracts operate on blockchain platforms by executing agreements automatically when predetermined conditions are met. They eliminate the need for intermediaries, thereby enhancing efficiency and reducing costs. By utilizing distributed ledger technology, smart contracts ensure transparency and immutability, making them tamper-proof. The code is written in programming languages like Solidity for Ethereum, and once deployed, the contract self-executes without human intervention. This innovation enables applications in various sectors, including finance and supply chain management, promoting trust through decentralized verification.