Exceptions in Java represent errors or unexpected conditions that disrupt normal program flow. There are different types of exceptions including checked exceptions that must be declared and handled, unchecked exceptions for runtime errors, and errors for JVM-level issues. Best practices for exceptions include throwing checked exceptions when the caller can recover, unchecked for non-recoverable errors, logging exceptions at the latest point, and following conventions like defining an exception hierarchy. Exceptions should provide context about what went wrong and where.