In React, extracting components with keys refers to the process of breaking down a larger component into smaller, reusable components, each with its own unique key. This approach helps to improve the modularity and flexibility of a component-based application, allowing developers to easily manage and update individual components without disturbing the rest of the application.

Using keys in this process is important because it helps React to keep track of each component instance, enabling more efficient and faster rendering of the application. Keys are essentially identifiers that React uses to identify individual elements within a list or array of elements. When a component is extracted into smaller components with keys, each component instance will have its own unique key, which allows React to quickly identify and update that specific component without having to update or re-render the entire page.

To extract components with keys in React, developers typically start by identifying reusable sections of code within larger components, and then extract these sections into separate, smaller components. These smaller components are then assigned a unique key that React can use to manage and update them as needed.

Overall, extracting components with keys is a powerful technique for building complex, component-based applications in React, allowing developers to build modular, maintainable code that can be easily updated and improved over time.