Node.js applications have a single thread, and synchronous work can tie up that thread, leading to blocked threads and poor performance. Traditional monitoring tools struggle to identify these issues without access to the source code. However, monitoring the event loop provides visibility into thread blocking issues, allowing developers to identify and optimize synchronous code for better performance. The event loop is responsible for executing code in response to events, handling both synchronous and asynchronous requests. Monitoring event loop lag can reveal whether synchronous code is slowing down execution, enabling developers to update their application or API code to improve Node performance metrics.