Introduction
Since the invention of the Java language, there has been a long-standing debate about checked versus unchecked/runtime exceptions. Some people argue that checked exceptions promote a better design. Others feel that checked exceptions get in the way, especially as systems mature and refactor over time, and therefore unchecked exceptions are better. The Effective Java Exceptions article settles this debate once and for all: both checked and unchecked exceptions are acceptable, and each has its purpose within an application. I highly recommend reading that article. I will refer back to its concepts and terminology going forward.
Exception Handling
Exception handling is an important part of the design and architecture of an application. It represents alternate flows or scenarios other than the "happy path" flow through an application. Generally, business requirements only tell you how the application should behave when everything happens as expected. They rarely describe what to do when something goes wrong.