Throwable is the super most interface in Exception hierarchy. This is inherited by Exception and Error classes.

• Error –  These are exceptional conditions that are external to the application, and that the application usually cannot anticipate or recover from. For example, suppose that an application successfully opens a file for input, but is unable to read the file because of a hardware or system malfunction. The unsuccessful read will throw java.io.IOError. Errors are those exceptions indicated by Error and its subclasses.
• Exception – Two kinds of Exception –

o   Checked Exceptions are exceptional conditions that a well-written application should anticipate and recover from. For example, suppose an application prompts a user for an input file name, then opens the file by passing the name to the constructor for java.io.FileReader. Normally, the user provides the name of an existing, readable file, so the construction of the FileReader object succeeds, and the execution of the application proceeds normally. But sometimes the user supplies the name of a nonexistent file, and the constructor throws java.io.FileNotFoundException. All exceptions are checked exceptions, except for those indicated by Error, RuntimeException, and their subclasses..

o   Unchecked Exceptions  are exceptional conditions that are internal to the application, and that the application usually cannot anticipate or recover from. These usually indicate programming bugs, such as logic errors or improper use of an API. For example, consider the application described previously that passes a file name to the constructor for FileReader. If a logic error causes a null to be passed to the constructor, the constructor will throw NullPointerException. The application can catch this exception, but it probably makes more sense to eliminate the bug that caused the exception to occur. Runtime exceptions are those indicated by RuntimeException and its subclasses.

Errors and runtime exceptions are collectively known as unchecked exceptions. These classes are further inherited by a whole bunch of exception classes.