Best practices for secrets management in serverless applications are crucial to prevent sensitive information exposure, as users often store secrets in source code or manifest files, leading to potential security breaches and vulnerabilities. To securely manage secrets, it is recommended to use a secure storage solution such as AWS Simple Systems Manager or Hashicorp's Vault, which can fetch encrypted values and provide automatic key rotation, greatly reducing the chance of sensitive information exposure. Storing keys in secret storage mitigates risks associated with storing sensitive information in static files within source code repositories or environment variables. Using secure storage solutions and implementing best practices such as rotating keys regularly can significantly improve security in serverless applications.