Terraform is a widely used open-source tool for infrastructure as code (IaC), which allows for the management of infrastructure through code using its domain-specific language, HashiCorp Configuration Language (HCL). The tool uses a declarative syntax that enables users to specify the desired state of infrastructure without detailing procedural steps. Terraform configuration files define infrastructure components and manage resource dependencies, either explicitly using the `depends_on` attribute or implicitly based on resource references. The tool automatically determines the order for resource creation or modification, ensuring consistency and preventing issues from unresolved dependencies. Modules in Terraform help organize and reuse code, supporting complex infrastructure management. Best practices suggest using implicit dependencies for simplicity, maintaining modular and reusable code, documenting dependencies, and using version control systems. Terraform handles error management and transient issues with built-in retry mechanisms, and users are encouraged to avoid circular dependencies by designing infrastructure wisely.