Custodial wallets are services where the wallet provider takes control of the user's private keys. This means that users trust the provider to secure their crypto assets without direct management of the keys themselves. Users access their funds through an interface provided by the wallet provider, such as a website or mobile app, but they must trust the provider to not mismanage or misuse their funds. While custodial wallets are typically easier to use and can offer recovery options, they also come with risks, such as potential hacks or the provider's bankruptcy.