The kernel of an operating system is a normal program like every other on your system, with the difference that it has special privileges (among other things). If a user-land program causes an error - say writing to a wrong memory location (of another process maybe), the kernel traps that and handles it somehow, usually by killing the offending process. Some people call that "crashing" or even "unexpectedly quitting" :-)
Now think about what happens when the kernel itself is in error - It doesn't know what to do and ... panics! This is called a "kernel panic" and can be caused by bad hardware or (more often) by a programmer error either directly in the kernel or in a loaded driver.
So either some hardware has gone bad, or the guy has done something, which wasn't foreseen by the programmers and triggered a bug.
And please notice: It's spelled "kernel", not "kernal".