Telemetry plays a critical role in software monitoring by collecting and transmitting data about application performance and user behavior. This process involves gathering metrics, logs, and events from software systems during operation and sending them to a centralized location for analysis. Telemetry helps identify performance bottlenecks, errors, and other issues in real time, allowing developers to make informed decisions and optimize system behavior. By utilizing this data, organizations can enhance user experience, improve software reliability, and facilitate proactive maintenance strategies.