W3C Trace Context is a standardized format designed to unify trace data from distributed tracing solutions. It addresses the problem of broken traces when requests travel between services that have been instrumented with different tools by defining two headers, traceparent and tracestate. Datadog APM supports W3C Trace Context, allowing teams to capture complete traces from services that follow this standard. This improves observability in highly distributed applications and enables troubleshooting by visualizing the complete path of requests across multiple services.