They have drainage holes on the bottom and typically come with matching saucers which also helps water to flow through and prevent soggy soil. The drainage hole helps your plant not retain too much water!
In this way, do terracotta pots need drainage holes?
Plant your plant in a porous pot with a good drainage hole, like the classic terracotta pot, and then place that pot within the larger decorative, no-drainage-hole pot. When it comes time to water, if the plant is small enough, you can take it out of its decorative pot and take advantage of the drainage hole.
Thereof, why you shouldn’t use terracotta pots?
While I love the color and organic nature of terracotta pots, many people with a more modern style would prefer otherwise. Terracotta will not fit into all design styles. Using them outdoors in cold weather can cause them to crack or break.