Performance optimization is vital in Power BI development services to ensure that reports and dashboards load quickly and handle large datasets efficiently. This involves optimizing data models, minimizing complex calculations, and utilizing performance-enhancing features like query folding and aggregations. Developers focus on reducing the load on resources, ensuring that end-users experience fast and responsive interactions with their data. Performance optimization is particularly important for large-scale deployments where slow performance can hinder productivity. By optimizing Power BI solutions, developers provide a smoother, more efficient user experience, enhancing the overall value of the system.