Instead of designing one product as a single whole, modular design builds a set of independent units to a shared standard, then produces different results purely by how many of them get combined and in what arrangement. A shelving system is the classic case: stack four identical cube modules and you get a narrow tower; lay them side by side and you get a low, wide shelf. No module gets redesigned — the layout alone produces an entirely different product line.
This only works if the interface between modules is standardized — the same pin layout, the same fastening method, the same load rating. Once that standard is locked in, adding a new module or upgrading an existing one means swapping that one piece, not redesigning the whole system. Modular design front-loads cost into getting that standard interface right, in exchange for much cheaper expansion, repair, and upgrades later.
It's the same principle behind component-based UI — a design system's buttons, cards, and modals get combined into different screens because they share a standardized interface (props, style tokens). Industrial design's modular systems are, in a sense, that idea's ancestor.
When to use
When a single product line needs several sizes or configurations, or when partial upgrades and repairs will happen often.