When is "java.io.IOException:Connection reset by peer" thrown?

java.io.IOException: Connection reset by peer

The other side has abruptly aborted the connection in midst of a transaction. That can have many causes which are not controllable from the server side on. E.g. the enduser decided to shutdown the client or change the server abruptly while still interacting with your server, or the client program has crashed, or the enduser's internet connection went down, or the enduser's machine crashed, etc, etc.

To expand on BalusC's answer, any scenario where the sender continues to write after the peer has stopped reading and closed its socket will produce this exception, as will the peer closing while it still had unread data in its own socket receive buffer. In other words, an application protocol error. For example, if you write something to the peer that the peer doesn't understand, and then it closes its socket in protest, and you then continue to write, the peer's TCP stack will issue an RST, which results in this exception and message at the sender.

java.io.IOException in Netty means your game server tries to send data to a client, but that client has closed connection to your server.

And that exception is not the only one! There're several others. See BadClientSilencer in Xitrum. I had to add that to prevent those errors from messing my log file.