Spatial domain filtering involves modifying an image by applying a filter or kernel to pixels within a neighborhood region. There are two main types of spatial filters - smoothing/low-pass filters which blur an image, and sharpening/high-pass filters which enhance edges and details. Smoothing filters replace each pixel value with the average of neighboring pixels, reducing noise. Sharpening filters use derivatives of Gaussian kernels to highlight areas of rapid intensity change, increasing contrast along edges. The effects of filtering depend on the size and shape of the kernel, with larger kernels producing more blurring or sharpening.