Application Performance Monitoring (APM) is a crucial practice that involves tracking and managing the performance of software applications. It provides insights into how applications behave in real-time, helping developers identify issues such as slow response times, high error rates, and transaction bottlenecks. APM tools collect data from various sources, including server metrics and user interactions, to ensure optimal application performance. By implementing APM, organizations can enhance user experience, improve system reliability, and streamline troubleshooting processes, ultimately leading to more efficient software deployments and better resource utilization.