I have PS module that contains a number of scripts for individual functions. There is also a "library" script with a number of helper functions that get called by the functions used in the module.
Let's call the outer function ReadWeb, and it uses a helper function ParseXML.
I encountered an issue this week with error handling in the inner helper ParseXML function.  That function contains a try/catch, and in the catch I interrogate:
$Error[0].Exception.InnerException.Message
...in order to pass the error back to the outer scope as a variable and determine if ParseXML worked.
For a particular case, I was getting an indexing error when I called ReadWeb.  The root cause turned out to be the $Error object in the Catch block in ParseXML was coming back $Null.  
I changed the error handling to check for a $Error -eq $Null and if it is, use $_ in the Catch to determine what the error message is.
My question is: what would cause $Error to be $null inside the Catch?
Note: This is written from the perspective of Windows PowerShell 5.1 and PowerShell (Core) 7.2.3 - it is possible that earlier Windows PowerShell versions behaved differently, though I suspect they didn't.
Accessing the error at hand inside a catch block should indeed be done via the automatic $_ variable.
Inside a module, $Error isn't $null, but surprisingly is an always-empty collection (of type System.Collections.ArrayList); therefore, $Error[0] - which in catch blocks outside modules is the same as $_ - is unexpectedly $null in modules:
What technically happens - and this may be a bug - is that modules have an unused, module-local copy of $Error, which shadows (hides) the true $Error variable that is located in the global scope.
$Error collection - just like in code running outside of modules.Therefore, a workaround is to use $global:Error instead (which is only necessary if you need access to previous errors; as stated, for the current one, use $_).
The following sample code illustrates the problem:
$Error.Clear()
# Define a dynamic module that exports sample function 'foo'.
$null = New-Module {
  Function foo {
    try {
      1 / 0     # Provoke an error that can be caught.
    }
    catch {
      $varNames =   '$Error', '$global:Error', '$_'
      $varValues =   $Error,   $global:Error,   $_
      foreach ($i in 0..($varNames.Count-1)) {
        [pscustomobject] @{
          Name = $varNames[$i]
          Type = $varValues[$i].GetType().FullName
          Value = $varValues[$i]
        }
      }
    }
  }
}
foo
Output; note how the value of $Error is {}, indicating an empty collection:
Name          Type                                     Value
----          ----                                     -----
$Error        System.Collections.ArrayList             {}
$global:Error System.Collections.ArrayList             {Attempted to divide by zero.}
$_            System.Management.Automation.ErrorRecord Attempted to divide by zero.
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