Indexing is a way to physically reorganise the records to enable some frequently used queries to run faster.
The index can be used as a pointer to the large table. It helps to locate the required row quickly and then return ot back to the user.
or
The frequesntly used queries need not hit a large table for data. they can get what they want from the index itself. - cover queries.
Index comes with the overhead of maintanance. Teradata maintains its index by itself. Each time an insert/update/delete is done on the table the indexes will also need to be updated and maintained.