Planetary gear sets are used in automatic transmissions to provide different gear ratios without interrupting torque flow during shifts. They consist of a sun gear, planet gears on a carrier, and a ring gear. Multiple planetary gear sets can be combined in compound sets like the Simpson and Ravigneaux to increase the number of available gear ratios. These compound sets use different combinations of holding the sun gear, carrier, or ring gear to achieve forward, reverse, and overdrive gear ratios.