[jwlato]

I surely don't know as much as simonmar about this, but I think this is a rhetorical shortcut. My understanding is that when a Haskell thread receiving the exception needs to allocate on the heap, the executing context will instead raise the exception.

As for why it's not a side effect, in Haskell all exceptions are considered to be bottom, the value that inhabits every type. Thus an exception can be raised anywhere and have any type. They can only be handled in IO though.