Performance: Matlab vs Python

You want to get rid of those for loops. Try this:

def exampleKernelA(M, x, N, y):
    """Example kernel function A"""
    i, j = np.indices((N, M))
    # Define the custom kernel function here
    kernel[i, j] = np.sqrt((x[i, 0] - y[j, 0]) ** 2 + (x[i, 1] - y[j, 1]) ** 2)
    return kernel

You can also do it with broadcasting, which may be even faster, but a little less intuitive coming from MATLAB.