Envoy is an open-source proxy developed to simplify microservices communication by serving as the data plane in a service mesh, facilitating data routing, load balancing, health checking, and service discovery. It can be integrated with Datadog, along with AWS App Mesh, a managed control plane that dynamically configures these proxies, enabling comprehensive monitoring of service mesh performance. Datadog integration allows for the collection and visualization of various metrics, including request counts and error rates, and supports distributed tracing by adding unique identifiers to service calls, providing detailed flame graphs and service maps to trace request flows. This integration enhances observability and management of microservices architectures, offering insights through visualizations and alerts on service performance, Envoy activity, and application metrics, with the option to create custom filters for additional data collection.