HTLCs are used to create trustless payment channels and facilitate atomic swaps between different cryptocurrencies. The core idea behind an HTLC is to lock funds in a contract that can only be released if specific conditions are met, typically involving the presentation of a cryptographic hash preimage within a stipulated time frame. If the conditions are not met, the funds will revert back to the original owner after the timeout. This mechanism reduces the need for trust between parties involved in the transaction, ensuring that neither party can cheat the other.