The java.awt.HeadlessException is a runtime exception in Java that occurs when code reliant on a keyboard, display, or mouse is executed in an environment lacking these peripherals, known as headless mode. As an unchecked exception, it doesn't need to be declared in the throws clause of a method or constructor. This exception typically arises when certain Java AWT components, like Frame and Button, which require interactive devices, are used in headless mode. A common workaround is to disable headless mode using the command line argument -Djava.awt.headless=false, or conditionally execute code based on the environment's capabilities. An example provided illustrates how to avoid the exception by checking if the environment is headless before using components that require a display. Additionally, tools like Rollbar can assist developers in tracking and managing such errors, offering real-time monitoring and analysis to enhance confidence in deploying production code.