Composite gates, also called compound gates, are logic gates which can be formed by combining several basic logic gates like AND, OR, and NOT gates. These gates are designed to perform complex logical operations, which are fundamental to the functioning of digital circuits. Composite gates are crucial in simplifying circuit designs and reducing the number of components needed, which often enhances the efficiency and performance of electronic systems. They are widely found in various applications, from simple digital devices to advanced computing systems, making them a cornerstone of modern electronics.

One of the most common composite gates could be the NAND gate, which represents "Not AND." A NAND gate is created by combining an AND gate and a NOT gate. It outputs a low signal only once all its inputs are high; otherwise, it outputs a high signal. The composite garden gates of the NAND gate is based on its capability to be utilized to create any kind of gate, a house called functional completeness. This makes the NAND gate extremely valuable in digital circuit design because it may simplify the creation of complex logic circuits.

Similarly, the NOR gate, or "Not OR" gate, is another fundamental composite gate. It's formed by combining an OR gate and a NOT gate. The NOR gate outputs a top signal only when all its inputs are low; otherwise, it outputs a low signal. Just like the NAND gate, the NOR gate is also functionally complete, meaning it can be utilized to generate every other form of logic gate. This feature makes NOR gates indispensable in designing digital systems, allowing engineers to create intricate circuits employing a minimal set of components.

Composite gates play a critical role in the optimization of digital circuits. By utilizing composite gates, designers can minimize the amount of individual gates needed, which reduces the entire complexity and size of the circuit. This not just saves space on printed circuit boards (PCBs) but additionally reduces power consumption and increases the reliability of the system. In integrated circuits (ICs), where space and power are premium, the utilization of composite gates is particularly advantageous.

Along with NAND and NOR gates, there are other forms of composite gates such as for instance XOR (exclusive OR) and XNOR (exclusive NOR) gates. The XOR gate outputs a high signal when an odd quantity of its inputs are high, which makes it useful in error detection and correction algorithms, as well as in arithmetic operations like addition in digital circuits. The XNOR gate, on one other hand, outputs a top signal when a straight amount of its inputs are high, including zero. These gates are important in building arithmetic and logic units (ALUs) in processors, enabling complex computations.