Code refactoring is a process in software development used to improve the internal structure of existing code without changing its external behavior. This practice enhances code readability, reduces complexity, and eliminates redundancy, making it easier to maintain and modify in the future. By refining the architecture, developers also improve performance and establish a cleaner codebase, which can lead to fewer bugs and improved collaboration among team members. Refactoring is a critical aspect of agile methodologies that promotes continuous improvement.