I read several posts on exception handling/rethrowing exceptions on here (by looking at the highest voted threads), but I am slightly confused:
-Why would you not want the immediate catch block to handle an exception but rather something above it?
-Also, I read quite frequently that you should only handle exceptions which you can "handle". Does that mean actually doing something about it, such as retrying the operation?
Your second point is the answer to the first. Sometimes the lower-level functionality does not know enough about the context of the application to know what the right action should be. For example, if opening a file for reading fails because there is no file of that name, then the application might want to ask for a different file, or abort the whole operation, or whatever. At some level, some part of the application will take the responsibility to do the right thing, unless of course just having the program crash is an acceptable action to take.
You might want to catch an exception (e.g. file not found) and do some processing - e.g. if you open two files and the second file is missing, you will want to close the first file again before you continue, so that it isn't left open.
You might then want to tell the caller that an error occurred, so you re-throw the same exception or throw a new exception, describing the problem.
In some cases, if you get an exception, your code has no way of knowing if it is an error or not (e.g. if you are asked to load an XML file, but you get a File Not Found exception, is that an error, or should you return a blank XMl result?). In these cases you either want to re-throw the exception, or not handle it all all, and let the calling code decide how to deal with the problem.
Answering to your second question - you need to handle the exception in the immediate block only if can do anything about it: for example close connection to db, close streams, retry or retry with different params, log exception (if there will not be an exception generic handler on the higher levels). Probably only immediate block of code knows such details and can handle them. Calling blocks need to know that the error occurred they might know better what to do with exception.
For example immediate block works with a file. A caller might try to open a file from different locations(In the process of "probing") and ignore several errors as long as at least one succeeds. Another part of code might consider the very first failed attempt as an error. Caller block might chose to notify the user that an error is occurred, probably let her/him know some helpful info on how to fix the problem. Also it is nice to provide the means to notify support of the problem – some kind of dialog allowing user to ask for help, describe problem and send a message. In this message you might attach logs, some info about the environment like OS, versions of frameworks, programs, browser capabilities whatever you need to diagnose the problem (if user permits you to do so).