Rollups function by executing transactions outside of the main blockchain while ensuring that all data is submitted back to the main blockchain for verification. This method minimizes congestion on the main chain, allowing for faster and cheaper transactions. There are two main types of rollups: zk-Rollups, which use zero-knowledge proofs to validate transactions, and Optimistic Rollups, which assume transactions are valid and only perform checks when fraud is suspected. Rollups have gained popularity as Ethereum continues to face scalability challenges due to high gas fees and slow transaction times during peak usage.