Separate state instances within the same configuration. Lets you manage multiple environments (dev, staging, prod) with the same codebase. Each workspace has its own tfstate file.
In Terraform Associate: terraform workspace new dev creates a workspace. The default workspace is called "default". It's an alternative to having separate directories per environment, though modules + directories are preferred for complex configurations.
Terraform Workspace is a concept that can show up on the exam. Check the full guide to see it in context.