This example shows how MATLAB applies image filtering step-by-step. First, the image is loaded into a matrix. Then, a filter kernel is created using fspecial, here an averaging filter that smooths the image. Next, imfilter applies this kernel to the image by sliding it over every pixel and averaging neighbors, producing a blurred image. Finally, imshow displays the filtered image. Variables img, filter, and filtered_img change as the script runs, showing the image data and filter matrix. Key points include understanding the filter kernel values and why convolution is used instead of simple multiplication. Changing the filter size changes the kernel matrix size and values accordingly.