A java.lang.OutOfMemoryError: PermGen Space error occurs in Java when the PermGen area of the heap, which stores metadata such as class declarations and method bytecode, is exhausted due to an excessive number of classes or large classes being loaded. Java's memory is divided into various regions, including Young, Tenured, and PermGen, and the default sizes for these regions can be adjusted using JVM arguments like -XX:PermSize and -XX:MaxPermSize to prevent this error. An example of this error can occur when a loop loads a vast number of classes using a library like javassist, filling the PermGen space. Solutions include increasing the PermGen size and analyzing heap dumps to identify and minimize problematic objects. Additionally, tools like Rollbar offer automated Java error monitoring, helping developers manage and resolve such issues more effectively.