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Database normalization organizes data to reduce redundancy and improve integrity by breaking information into related tables, following normal forms (1NF, 2NF, 3NF). This prevents duplicate data, maintains consistency, and simplifies maintenance. Denormalization intentionally adds redundancy to improve read performance by reducing joins, useful for analytics and read-heavy applications. The optimal approach is to normalize first for data integrity, then selectively denormalize when performance requires it.