Mastering Rails begins with understanding the fundamental concepts of Ruby on Rails, a powerful web application framework built on the Ruby programming language. As a beginner, you'll want to familiarize yourself with key components like the Model-View-Controller (MVC) architecture, which separates application logic into distinct layers for better organization and maintainability. Start by setting up your development environment and installing Rails, after which you can generate a new application using the command rails new your_app_name. This generates the necessary folder structure, enabling you to dive into coding your first web application.

As you progress, it’s essential to explore the extensive range of built-in features that Ruby on Rails offers. This includes Active Record for database interactions, Action View for creating views, and Action Controller for handling requests. To master Rails, consider the following steps:

1. Build simple applications to understand routing and CRUD operations.
2. Utilize Rails generators to speed up development.
3. Learn about RESTful conventions.

As a Ruby developer, leveraging the right tools can significantly enhance your productivity and the quality of your code. Here are the top 10 gems that every Ruby developer should know:

1. Rails - The most popular web application framework that makes building database-backed applications a breeze.
2. RSpec - A behavior-driven development (BDD) framework for Ruby applications, facilitating easy testing and enhanced code quality.
3. Devise - An authentication solution for Rails applications, allowing for easy user management.
4. Pry - An alternative to the standard IRB shell for Ruby, providing a powerful interactive programming environment.
5. Capybara - A tool for integrating testing web applications, allowing developers to simulate how users interact with their apps.

Using these gems can help streamline your development process and improve the maintainability of your applications. The remaining gems include:

6. Sidekiq - A framework for background job processing, which allows you to handle tasks asynchronously.
7. FactoryBot - A library for creating test data easily, enhancing the testing experience.
8. Active Record - The ORM layer for Rails, enabling seamless database interactions.
9. Rubocop - A static code analyzer and formatter for Ruby, promoting best practices and style guidelines.
10. Bundler - A gem management tool that provides a consistent environment for Ruby applications.

Ruby development offers a wealth of features and an elegant syntax, yet developers often face common challenges that can hinder productivity and efficiency. Performance issues can arise when working with large applications, as Ruby is an interpreted language that may not execute code as quickly as compiled languages. Additionally, managing dependencies and ensuring compatibility between various gems can become cumbersome, leading to conflicts that complicate the development process.

To overcome these challenges in Ruby development, developers can adopt best practices such as utilizing performance profiling tools to identify bottlenecks and optimize code execution. Implementing version management systems like RVM or rbenv can also help manage dependencies effectively, ensuring that all team members work with the same versions of gems and avoiding compatibility issues. Furthermore, embracing a thorough testing strategy can significantly reduce the risk of bugs and make maintenance easier.