DAX (Data Analysis Expressions) is essential for Power BI development as it allows developers to create custom calculations and aggregations within reports. DAX is used to build measures, calculated columns, and calculated tables, enabling dynamic data analysis. It helps Power BI developers go beyond basic data representation by implementing complex business logic, such as time intelligence (year-over-year growth, month-to-date comparisons) and custom filters. Understanding DAX is crucial for transforming data into insightful and actionable information, as it allows developers to manipulate data with high precision and tailor reports to business needs.