Harmonics in electrical circuits are created through the distortion of pure sinusoidal waveforms, resulting in signals at multiples of the fundamental frequency. The Total Harmonic Distortion (THD) is a key measure of the quality of Variable Frequency Drives (VFDs), where excessive harmonics can lead to overheating in motors and transformers, as well as increased voltage stress on conductors. The discussion highlights that harmonics can be understood mathematically through Fourier analysis, which breaks down non-sinusoidal waveforms into their constituent frequencies. There is a debate on whether harmonics should be viewed purely as a mathematical concept or if physical principles are also necessary for a complete understanding. Ultimately, the conversation emphasizes the importance of grasping both the mathematical and physical aspects of harmonics in electrical engineering.