In NestJS, when a controller method throws an exception, the framework passes it to an exception filter if one is registered. The filter's catch method receives the exception and the context, allowing it to send a custom response. This stops the normal request flow and returns an error response to the client. The example filter catches all Error exceptions and sends a 500 status with a JSON message. The execution table shows the request starting, the exception thrown, the filter catching it, and the response sent. Variables track the exception and response status and body changes. Key moments clarify why filters catch exceptions and the importance of sending a response. The quiz tests understanding of when the filter is called, response status changes, and normal flow without exceptions.