Providers in Terraform are plugins that enable interaction with APIs such as cloud and Software-as-a-service providers. They are specified in the configuration code and make resources and data types available for use in the Terraform code. There are hundreds of available providers, making Terraform a versatile tool. Providers can be developed independently from Terraform itself and are usually managed by Hashicorp, third-party technology vendors, or community groups. They are downloaded during the terraform init stage and can be configured using a providers block with settings such as endpoint URLs or cloud regions. Some commonly used providers include Azure, AWS, Google Cloud, Kubernetes, Oracle Cloud, and Alibaba Cloud.