In .NET, the role is performed by the Just-In-Time (JIT) compiler that compiles the managed code in the form of Intermediate Language (IL) to the executor’s machine native code at runtime. Thus, this dynamic compilation prevents ineffective work and permits the .NET framework to not be tied to definite types of the operating system or computer equipment and positively impacts IL adapting to the requirements of the definite designated operating system.

But before getting to understand about JIT compiler, one should have an idea about how .NET applications are built up. The interesting fact is that during the changing of compilation, .NET programs' source code transforms to Microsoft Intermediate Language (MSIL or IL). This IL, which is independent of the platform, means the IL is not executed directly by the CPU. In this way the JIT compiler eliminates this gap by transforming IL into executable code by the hardware.

Types of JIT Compilation

JIT compilation in .NET can be categorized into three main types, each designed for specific scenarios:

Normal JIT:

• Transform IL code into native code only where required, that is, during runtime, each of the methods.
• Keeps the compiled code in memory for later use so that the overhead costs for subsequent calls are kept at bay.

Econo JIT:

• Designed for improved memory efficiency, it firstly compiles IL code but throws away the native code thereafter, which is helpful for devices with restricted memory space.

Pre-JIT (Ahead-of-Time Compilation):

• Turns all the IL code into native code right at the start of its running process. There are tools like NGEN (Native Image Generator) that make this process easier and faster apart from minimizing the time an application takes to start.

The paper has enumerated how each type provides a balance between performance, memory, and flexibility at run time. For more detail regarding how to get the most out of the CLR at runtime, see this article on CLR Features.

How JIT Works

• Initial Compilation: At runtime, the language-specific compiler is capable of compiling the .NET application's source code to intermediate language IL and storing the IL in a Portable Executable (PE file).
• Runtime Execution: In runtime, the CLR uses the JIT compiler to compile ILs into the respective native language as close as possible to the runtime just before it happens. This means that the dependency of the code with the particular hardware and operating system is optimized. 

Performance Optimization:

• Inlining: Frequently used methods are inlined to minimize function call overhead.
• Dead Code Elimination: Eliminates all unnecessary instructions.
• Loop Unrolling: Loops are unrolled to reduce the overhead of conditional checks at execution.

Discover how the JIT makes a trade-off between dynamic translation and efficiency in this blog post, Role of JIT in.

Key Features of JIT Compilation

1. On-Demand Code Translation

JIT compilation defers the generation of native code until the first invocation of a method or function. This on-demand approach reduces memory usage and accelerates application startup.

2. Code Optimization

JIT performs many optimizations specific to the current runtime environment, such as inlining, loop unrolling, and dead code elimination. With the availability of runtime information, JIT generates efficient native code optimized for the target hardware.

3. Cross-Platform Capability

JIT standardizes IL into an intermediate format, meaning that the .NET application now can be run on cross-platform environments without modification because the JIT compiler adjusts this IL based on the targeted system's architecture.

Explore more on runtime adaptations through What is JIT?

Advantages of JIT Compiler in .NET

1. Improved performance

By compiling code at runtime, the JIT can adapt to specific hardware and software environments, thereby optimizing performance.

2. Good memory

JIT compilation reduces memory usage by compiling only executed code. This is in contrast to traditional static compilation, where all code is compiled first regardless of execution.

3. Simplified schedule

As an intermediate IL, developers can deploy .NET applications without worrying about the end-user operating system or hardware configuration.

For additional information on how JIT enhances managed code execution, see What is the role of the JIT Compiler in the .NET Framework?

Challenges and Limitations

1. Startup Overhead

The on-the-fly compilation introduces latency at the first execution of methods, which may lead to a slower startup time of the application compared to fully precompiled solutions.

2. Dependency on Runtime

JIT relies extensively upon the runtime environment. Any bottleneck in CLR or hardware incompatibility may affect the performance of execution.

3. Resource Constraints

In resource-constrained environments, such as mobile devices, the overhead due to runtime compilation may strain system resources.

Conclusion

The Just-In-Time compiler is a crucial component in the .NET ecosystem, maintaining flexibility and performance by creating native code on the fly depending on the runtime environment. Although small problems arise, the benefits that come with platform independence, runtime optimizations, and minimal memory usage make this a very important component of modern application development.

This article uses detailed information and includes references to internal sources for further research.