An exotic sphere of dimension n is a smooth manifold of dimension n which is homeomorphic to the standard n-dimensional sphere but not diffeomorphic to it. In what follows, I always assume that n is greater than 5. One can show that the set of differentiable structures on a topological sphere of dimension n is a finite group, isomorphic to the group of connected components of the group of diffeomorphims of the standard (n−1)-dimensional sphere (one constructs something homeomorphic to the n-sphere by gluing two n-balls by a diffeormorphism of the (n−1)-sphere boundary. One obtains an exotic sphere if this diffeomorphism is not continously connected to the identity).
The possibility of an interest of exotic spheres in physics was first suggested by Witten in the paper "Global gravitational anomalies" (http://projecteuclid.org/euclid.cmp/1103943444 ). The main subject of the paper are the global gravitational anomalies of the 10 dimensional superstring theories. In this context, the appearance of exotic 11-dimensional spheres is quite natural. We want to study the behavior of the theory under a diffeomorphism of the 10-dimensional sphere not continously connected to the identity. To do that, we consider a 11-dimensional manifold with a metric that interpolates between the 10-dimensional metric and its image under the diffeomorphism i.e. we have essentially inserted an 11-dimensional exotic sphere. To compute the anomaly, we have to compute the variation of the spectrum of the 10-dimensional Dirac (and Rarita-Schwinger) operators under this interpolation, which is related to the index of some 12-dimensional Dirac (and Rarita-Schwinger) operators. This relation between anomalies in dimension d and indices in dimension d+2 is quite standard and is true for local/global gauge and gravitational anomalies. But in this construction, the dimensions d+1 and d+2 have no physical meaning, they are just a mathematical trick to compute a physical quantity, the anomaly, in dimension d. The fact that the computation of the global gravitational anomaly for 10-dimensional superstring theories uses exotic 11-spheres and 12-dimensional Dirac operators has a priori nothing to do with the existence of well-defined quantum theories in 11 and 12 dimensions.
So we can ask for a more physical meaning of exotic spheres. A proposal in this direction is made in the Witten's paper: exotic n-spheres should be thought as gravitational instantons in n-dimensional gravity and should give rise to solitons in (n+1)-dimensional gravity. For example, Witten asks: is it possible to find the 10-dimensional solitons corresponding to the 7 exotic 9-spheres in the 10-dimensional string theories ? One could ask the analogue for M-theory: is it possible to find the 11-dimensional solitons corresponding to the 5 exotic 10-spheres in the 11-dimensional M-theory ? Has any progress be made on these questions since Witten's paper?
In fact, I am more interested by instantons than by solitons. Is there any indication of the presence of the gravitational instantons corresponding to the 991 exotic 11-dimensional spheres in the 11-dimensional M-theory? If I assume that they exist, I could ask: if I put a gravitational instanton between the Horava-Witten walls (take an Euclidean time) defining the strong coupling limit of the E8×E8 heterotic superstring theory (http://arxiv.org/abs/hep-th/9510209 ) and if I take the walls very close from each other, what becomes the gravitational instanton from the E8×E8 heterotic superstring point of view ?
This question is motivated by the fact that there is a hidden E8 in the exotic 11-spheres. More precisely, the group of differentiable structures on the 11-sphere is cyclic of order 992 (the standard one + 991 exotic). The cyclic generator M can be constructed as follows. Consider the 12-dimensional singular manifold X defined by the equation x30+x51+x22+x23+x24+x25+x26=0 in C7. Its has a singularity at the origin O. Take a small 13-dimensional sphere around O in C7 and intersect it with X: this gives a smooth 11-dimensional manifold which is our M. Now X is related to E8 because the intersection matrix of the vanishing cycles of the singularity of X at O is the Cartan matrix of E8 (the analogue result for the complex surface singularity x30+x51+x22 is well-known and plays an important role in the Heterotic on T4/ type II on K3 duality: this complex surface singularity can locally appear in a K3 surface and this corresponds to an enhancement to E8 of the gauge group of the theory). I ask myself if there is a relation between this 12-dimensional E8 and the 10-dimensional E8×E8 of the heterotic superstring theory.