In the video titled “AI Agents’ Secret Sauce” by Sam Witteveen, the host discusses the significance of custom tools for AI agents, emphasizing their role in enhancing functionality and improving performance. The video covers various categories of tools, including those for information retrieval, verification, and action-taking. Witteveen explains the importance of clear naming and descriptions for tools, and how to handle bad inputs and outputs from language models. He also provides insights into building a library of custom tools and the iterative process of developing AI applications.