What is the difference between combinational and sequential circuits in VLSI?

Combinational circuits have outputs depending only on current inputs with no memory elements. Examples: adders, multiplexers, decoders. They create combinational paths between flip-flops. Sequential circuits include memory elements (flip-flops, latches) and outputs depend on inputs and current state. They implement state machines and registers. In timing analysis, combinational delay determines setup slack; sequential elements define clock boundaries. Both are essential: sequential for state storage, combinational for data processing between states.