Ruby on Rails is a powerful web application framework that has transformed the way developers build robust and scalable web applications. This framework, often called Rails, is built on the Ruby programming language and emphasizes convention over configuration, allowing beginners to get started quickly without needing to understand every single configuration detail. One of the defining features of Ruby on Rails is its MVC (Model-View-Controller) architecture, which separates application logic and user interface components, making code easier to manage and scale. In this guide, we'll explore the essential components that make Rails a magical option for budding developers.

As a beginner, there are several steps you can take to dive into the world of Ruby on Rails successfully. Start by installing Ruby and Rails on your machine; there are numerous tutorials available to help you through the installation process. After setting up your environment, consider building a small project to familiarize yourself with the structure of a Rails application. You can follow these steps to get started:

1. Learn the fundamentals of Ruby programming.
2. Understand the Rails directory structure and its key components.
3. Create a simple CRUD application to practice creating, reading, updating, and deleting records.

Building scalable applications using Ruby on Rails requires a strategic approach to development. Here are the top 10 tips that can help you achieve that scalability:

1. Optimize Database Queries: Focus on using ActiveRecord efficiently by utilizing methods like select and includes to minimize database hits.
2. Employ Background Jobs: Use background processing tools, like Sidekiq or Resque, to handle time-consuming tasks outside of the web request-response cycle.
3. Caching Strategies: Implement caching at various levels, including page caching, action caching, and fragment caching, to improve response times and reduce server load.
4. Use Gems Wisely: While gems can accelerate development, be selective about which ones to use; avoid bloating your application with unnecessary dependencies.

Continuing with the remaining five tips, consider the following:

6. Load Testing: Conduct load testing using tools like JMeter or Gatling to identify bottlenecks before they impact user experience.
7. Scalable Infrastructure: Choose a scalable cloud service like AWS or Heroku that allows your application to grow seamlessly with traffic demands.
8. Modular Design: Design your application in a modular way, utilizing service-oriented architecture (SOA) or microservices for better maintainability.
9. Monitor Performance: Use performance monitoring tools such as New Relic or Scout to keep track of application health and identify issues proactively.
10. Regular Code Reviews: Implement a routine for code reviews to ensure that coding standards are maintained and scalability considerations are always at the forefront.

Ruby on Rails, while being a powerful framework for web development, comes with its share of challenges. One of the most common issues developers face is performance bottlenecks. This can manifest when applications scale up and the response time increases. To mitigate this, developers should focus on optimizing code, utilizing caching mechanisms, and employing background jobs for time-consuming processes. Additionally, understanding the Active Record framework is essential as inefficient database queries can significantly hamper performance.

Another prevalent challenge in Ruby on Rails development is the dependency on gems. While gems provide a wealth of functionality, they can also introduce compatibility issues, especially when updating the Rails version. It's crucial to regularly review and update the gems being used, as well as conducting thorough testing after any dependency changes. Creating a lock file can help maintain consistency. Moreover, it’s advisable to limit reliance on too many external gems, focusing instead on building custom solutions when necessary for greater control over the application’s architecture.