Comprehensive and Detailed Explanation From SAP S/4HANA Cloud Public Edition, Management Accounting documents:

Core Data Services (CDS) serve as the foundational modeling layer in SAP S/4HANA that acts as a universal language to read and process data across various applications. CDS provides a semantically rich data model that extends standard SQL to bridge and unify traditional transactional (OLTP) and analytical (OLAP) processing into a single architectural layer. By using CDS views, developers and consultants can define data models on the database itself rather than the application server, which significantly enhances efficiency and performance by leveraging the power of SAP HANA.

This layer provides a unified semantic layer for all use cases, including search, operational reporting, and real-time analytics. Furthermore, CDS supports domain-specific annotations that allow the UI, such as SAP Fiori, to automatically interpret how data should be displayed. It also enables associations to define relationships between different views, simplifying how different applications share and consume the same data consistently across the system.