Compiler optimization is the process of improving the efficiency and performance of a compiler in translating programming languages into machine code. This involves analyzing and restructuring code to reduce execution time and memory usage, as well as improving the overall performance of the compiled program. Compiler optimization techniques include loop optimization, data flow analysis, and code generation strategies that aim to produce optimized code that runs faster and uses fewer resources. Overall, compiler optimization plays a crucial role in enhancing the performance of software applications and ensuring optimal utilization of hardware resources.