Modular arithmetic is crucial in competitive programming, especially when working with large numbers that can easily exceed the maximum value a data type can store. Using modular arithmetic, you can keep numbers within a manageable range by taking the remainder of a division operation. This is especially common in combinatorics, where results can quickly grow too large. Many competitive programming problems explicitly require answers modulo a large prime number (like 10^9+7) to prevent overflow and ensure consistent results. Understanding how to apply modular arithmetic helps you avoid overflow errors and solve problems that deal with large numbers efficiently.