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A forward declaration is a declaration of an identifier (class, function, variable, etc.) before its actual definition is provided. Forward declaration of a class informs the compiler about the existence of a class or a data type without providing its whole definition. It is usually placed at the beginning of the code, before any other declarations or definitions in the source file.

Forward declaration is useful in several situations. Some of the main reasons for using forward declaration are: 1. Improve compilation time: Forward declaration helps to speed up the compilation process as the compiler doesn't need to parse the entire class definition every time it encounters the class. 2. Resolve dependencies: If two classes have member functions that take objects of the other class as arguments or return them, you can use forward declarations to resolve such dependencies without including the complete class definition. 3. Avoid circular references: Forward declaration helps avoid circular references, which can occur when two or more classes depend on each other's definitions.

Consider the following example to understand the purpose of forward declaration: ```cpp // This is a forward declaration of the class 'B'. class B; class A { public: void foo(B& bObj); }; class B { public: void bar(A& aObj); }; void A::foo(B& bObj) { // Some implementation using bObj } void B::bar(A& aObj) { // Some implementation using aObj } ``` In this example, we have two classes (A and B) that have member functions (foo and bar) that take objects of the other class as arguments. By using the forward declaration of class B at the beginning of the code, we can inform the compiler about the existence of class B without providing its complete definition first. This allows class A to be defined before class B and enables the code to work correctly.