In C#, garbage collection is the process of automatically reclaiming the memory occupied by objects that are no longer referenced by the application. This is done by the garbage collector, a component of the .NET runtime.

The garbage collector works by identifying objects that cannot be accessed anymore, called garbage, and reclaiming their memory. It does this in multiple steps, including marking objects that are still in use, identifying and compacting areas of memory that are no longer in use, and updating references to relocated objects.

The garbage collector is designed to work transparently to the developer, so you don’t need to explicitly free memory like in languages such as C or C++. Instead, the garbage collector automatically determines when to perform garbage collection based on factors such as available memory and CPU usage.

While the garbage collector greatly simplifies memory management, it can introduce some performance overhead. To optimize garbage collection performance, you can use techniques such as minimizing object allocations, reusing objects whenever possible, and using finalizers sparingly.

In addition to the automatic garbage collection, C# also provides the `IDisposable` interface, which allows you to manually release unmanaged resources when they are no longer needed. This is useful for resources that are not managed by the garbage collector, such as file handles or database connections.