Concentrated liquidity on Osmosis allows liquidity providers to allocate their capital within specific price ranges in a liquidity pool, rather than across the entire price spectrum. This approach enables providers to concentrate their funds where they anticipate the most trading activity, potentially earning more transaction fees compared to traditional liquidity provision. This mechanism is particularly important because it increases market efficiency, reduces slippage on large orders, and allows liquidity providers to tailor their exposure to market movements, optimising their return on investment.