Collision handling with open addressing means when two keys hash to the same index, we look for the next empty slot to place the new key. We start by computing the hash index using modulo operation. If the slot is empty, we insert the key there. If not, we move to the next slot, wrapping around to the start if we reach the end of the table. This process continues until an empty slot is found. The example shows inserting keys 12, 22, and 32 into a table of size 5. Key 12 goes to index 2 directly. Key 22 also hashes to 2 but finds it occupied, so it moves to index 3. Key 32 probes indexes 2 and 3, both occupied, and inserts at index 4. This method avoids linked lists and keeps all keys in the table itself.