An
exception
is a situation that needs to stop the normal sequential execution of instructions which is being executing by the processor.
Examples are when reset the the processor core, when an memory
access fails or instruction fetch fails, when a software interrupt
instruction (SWI) is executed when issue of a system call, or when an undefined instruction starts executing, or when an external an interrupt has been raised.
Exception handling is the mechanism of processing these
exceptions by halting currently running normal sequential of instructions.