Just-in-Time (JIT) compilation is a critical performance optimization technique used in managed runtime environments like the Java Virtual Machine (JVM) and the .NET framework. Instead of compiling Java source code directly into machine code ahead of time, as traditional compilers do, Java compiles the source code into an intermediate form called bytecode. This bytecode is platform-independent and executed by the JVM. The JVM uses JIT compilation to convert bytecode into native machine code at runtime, allowing Java applications to run faster because machine code is directly executed by the host processor.

JIT compilation improves efficiency by focusing on sections of code that are used frequently (known as "hotspots") and compiling them just before they are needed. This on-the-fly optimization allows the JVM to dynamically adjust to the specific hardware and execution context, making the application more responsive to real-world performance demands. JIT compilation also reduces the time spent reinterpreting bytecode repeatedly, offering near-native execution speeds.

The primary advantage of JIT compilation is that it combines the flexibility of interpreted languages with the performance benefits of compiled languages. JIT-compiling environments like the JVM can also collect runtime information, enabling advanced optimizations like inlining functions and optimizing memory management. This process results in better application performance without sacrificing Java’s platform independence.