A tool schema describes the tool name, purpose, parameters, required fields, enums, and validation rules. The model uses it to construct a tool call; your runtime uses it to reject malformed or dangerous input. Precise schemas reduce hallucinated arguments and make tool use easier to test.
ELI5
Think of Tool Schema as a tool from the builder toolbox. The structured contract that tells a model what a tool does and which arguments are valid.
In practice
Use it when you are installing, editing, testing, reviewing, or shipping code. In practice, define the owner, input, output, and failure mode before you rely on it.