Learn Russian: Пассажиры сдают багаж, за исключением маленьких сумок. - Passengers hand over baggage, with the exception of small bags.

This is driven by the compound preposition за исключением (with the exception of), which always requires the Genitive case. Since the sentence refers to multiple small bags, we use the Genitive plural form.

The verb сдают can mean 'rent out' or 'pass an exam'. Why is it translated as 'hand over' here?

The verb сдавать (imperfective) has many meanings depending on what it is paired with. When used with багаж (baggage), it forms a standard set phrase that means to 'check in' or 'hand over' your luggage at an airport or station.

Why is there an extra о in сумок?

The Nominative singular is сумка. When forming the Genitive plural by dropping the final -а, we are left with the awkward consonant cluster -мк. To make it easier to pronounce, Russian inserts a 'fleeting' vowel, resulting in сумок.

Is the comma before за исключением strictly necessary?

Yes. In Russian punctuation, phrases that introduce a formal exception or exclusion (like those starting with за исключением or кроме) are treated as separate clarification phrases and must be set off by commas.