Rust makes a distinction between recoverable and unrecoverable errors. Recoverable errors are the E in Result<T, E>. You can take action and recover, depending on what kind of E it is.

Unrecoverable errors are things like stack overflows or out of bounds array access. There is no reasonable way to soldier on after this, so the program should just end. Trying to continue the program in such situations only leads to pain. Like array accesses out of bounds that allow you to read unrelated memory.

But it’s still an evolving area. For example, failure to allocate memory - is that recoverable or unrecoverable? Initially it was thought that it was unrecoverable, and programs would panic if memory failed to allocate. This seemed reasonable, until folks tried to use Rust within the Linux kernel. Within the kernel, failure to allocate memory is recoverable. Rust is evolving the semantics here.

All this to say, yes, Rust does allow you to define functions that either fail in a recoverable way, in which case the calling function should handle it. Or they fail in an unrecoverable way in which case there’s nothing the calling function can do to recover. Thankfully, panics in third party code are relatively rare so this doesn’t happen in practice.