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Radio buttons allow users to select one value from multiple options, often grouped as radio button groups. In the tutorial, the instructor demonstrates their use in a reactive web application for issue management. The application includes an "Issue" entity with attributes like title, description, and date/time, along with a static entity for issue priority (high, medium, low). Static entities serve for drop-down and radio button values that do not frequently change. The tutorial also shows how to create a relationship in the entity diagram by connecting the priority static entity to the issue entity, establishing a foreign key for priority.