In object$-$oriented programming, classes serve as blueprints for creating objects with specific attributes and behaviors. Reflect on the significance of creating classes in Java and their role in software development. How do constructors facilitate object initialization, and what are the advantages of constructor overloading in Java? Furthermore, delve into the concept of static fields within classes. How do static fields differ from instance fields, and what are the implications of using static fields for data sharing and encapsulation? Provide examples where static fields prove beneficial in Java applications, and how do they align with principles of object$-$oriented design?