Callbacks are functions passed as arguments to other functions, executed when an asynchronous operation completes. Callback hell occurs when multiple nested callbacks make code difficult to read and maintain.

// Callback hell example
getData((err, data) => {
    if (err) throw err;
    processData(data, (err, processed) => {
        if (err) throw err;
        saveData(processed, (err, result) => {
            if (err) throw err;
            console.log('Data saved successfully');
        });
    });
});

Solutions include Promises, async/await, and modularizing code into smaller functions.