Power BI developers manage complex data models by organizing tables and relationships efficiently, ensuring proper data normalization and star schema design. They simplify data models by separating fact and dimension tables and defining clear relationships between them. Power BI developers also use calculated columns, measures, and hierarchies in DAX to handle complex calculations and queries. By maintaining clean and well-structured data models, they make it easier to create intuitive dashboards and reduce query execution time, enhancing the performance and usability of the reports.