Java 8 introduced parallel streams to allow collections to be processed in parallel using multiple threads. While parallel streams can improve performance by splitting work across CPU cores, they also introduce challenges. Parallel streams use the ForkJoinPool by default, so long-running or blocking tasks could impact other parallel operations. Side effects must also be avoided. Parallel streams may not provide benefits with a single CPU or for I/O-bound work. Developers must consider hardware resources and task dependencies to determine if parallel streams are applicable.