File management functions in C allow programs to work with files. They provide functions to open, read, write, and close files. Some key functions include fopen() to open a file, fread() and fwrite() to read from and write to files, and fclose() to close a file. Files can be opened in different modes like read, write, append depending on whether the file needs to be read from or written to. Command line arguments allow passing of inputs to a program from the command line when it is launched.