Coalitions in parliamentary systems are significant because they allow for the creation of stable governing bodies by merging smaller parties to achieve a majority. These alliances enable diverse political perspectives to be represented, fostering a more inclusive decision-making process. Coalitions can enhance legislative effectiveness by encouraging compromise and collaboration among parties with different ideologies. Additionally, they reflect the complexities of a multi-party system, often requiring negotiation and agreement on key issues, which can lead to pragmatic governance and policy innovation.