Earlier quoted context omitted.
"only catch what you can handle" is incredible nonsense. Your code is the only code that knows how the code it's calling might fail -- it MUST catch all exceptions and either handle them, or re-raise them with a well defined type that is documented and declared in your API. Anything else just leads to buggy software that has a try/catch block at the top level of the event loop/main/thread start function to deal with…
Obviously you should be converting exceptions that leave your library into other areas, but internally? Converting exceptions over and over and over again just means losing information from those exceptions, or worse hiding them. If I'm forced to dump a stack-trace to the text file, I want the exact exception that caused the problem, not some vague "Operation Exception" that quintuply wraps my actual desired exceptio…
As for rewrapping errors, yes, each subsystem should have its own error space. You don't lose data by nesting errors; on the contrary, each level can add additional context to an error result that makes debugging an unexpected issue far easier.