Bile is a digestive fluid produced by the liver and stored in the gallbladder, playing a crucial role in the emulsification of fats during digestion. It contains bile salts, cholesterol, bilirubin, and other substances that aid in breaking down dietary fats into smaller droplets, making them easier for digestive enzymes to act upon. This process is essential for the absorption of fat-soluble vitamins and nutrients in the intestines.