The Soundness Theorem states that if a set of axioms and inference rules can derive a conclusion, then that conclusion is true in every model where the axioms are true. This principle is crucial in formal logic because it establishes a connection between syntactic derivability and semantic truth, ensuring that valid arguments in a logical system preserve truth across interpretations. It highlights the reliability of deductive reasoning and connects closely to the limitations and potential extensions of propositional logic, natural deduction in first-order logic, and the resolution principle used in refutation proofs.