What is the role of `tsconfig.json` in native TypeScript execution with Node.js?

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What is the role of `tsconfig.json` in native TypeScript execution with Node.js?
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The `tsconfig.json` file configures the TypeScript compiler. It specifies compiler options like target JavaScript version (`target`), module system (`module`), output directory (`outDir`), and more. These options dictate how TypeScript code is compiled into JavaScript, ensuring compatibility with Node.js and the desired runtime environment.