Standard objects cover most sales, marketing and service needs, but many businesses track something else: properties a real estate firm manages, vehicles a fleet company services, enrollments a school processes, or locations a franchise runs. A custom object gives that thing its own records instead of squeezing it into a contact or company property. Custom objects are available depending on your subscription, usually at Enterprise level.
When you create a custom object you define its schema: its name, a primary display property, which properties are required, which are searchable, and which other objects it can associate with. These choices are hard to change later, so they deserve planning. A custom object with no associations is an island, and one with no searchable properties is hard to find.
Before building one, ask whether a property, an association label or a standard object would do the job. Custom objects are the right choice when the thing has its own lifecycle, many records per contact or company, or its own properties that would otherwise clutter another object.
Treat custom objects as part of your data model. Document what each one represents, who owns it, which integration writes to it, and how it associates with contacts, companies and deals.