Handling exceptions in Android is crucial to prevent application crashes. Exceptions are problems that occur during runtime, and handling them involves catching and responding to these issues. In Kotlin, exceptions can be categorized into checked and unchecked types, with the latter not being checked at compile time. To handle exceptions, developers can use try/catch blocks or runCatching functions, which provide a way to propagate exceptions higher up in the call stack. Additionally, Android provides the Thread.UncaughtExceptionHandler interface for handling unhandled exceptions. Reporting exceptions using Sentry's Android SDK allows developers to track and analyze errors, providing valuable insights into application performance and stability.