Hooks are functions that allow you to use state, effects, and other React features in functional components, making them an ideal way to simplify code and avoid class-based components. However, there are rules and limitations that must be followed in order to prevent bugs or unexpected behavior. For instance, hooks should always be called at the top level of the component and in the same order; calling them conditionally or inside loops, nested functions, or other hooks can disrupt the order of the hooks and cause errors or inconsistencies. Additionally, stale state or props should not be used in effects or callbacks as hooks rely on closures to access current state or props; using the dependency array of useEffect or useCallback can prevent this. Additionally, any effects that create subscriptions, timers, or other resources must be cleaned up when the component unmounts or when the effect changes. To do this, a function should be returned from the effect to perform the cleanup.