What is the licensing rationale behind distributing proprietary (copyrighted) software within a common smartphone's Android system? I mean software like device drivers (camera, GSM modules etc.) or closed source apps like Google Apps. I thought proprietary software can not be distributed alongside a GPLv2 Linux kernel which Android runs on top of.
I thought proprietary software can not be distributed alongside a GPLv2 Linux kernel which Android runs on top of.
No, the so-called "viral" nature of GPL doesn't apply to things that are merely distributed together: it only comes into play when statically linking GPL and other code into a single binary. Including non-free kernel modules and non-free APKs in a Linux system such as Android is perfectly fine.
If it weren't OK, this would be a problem for desktop Linux distributions as well, which often rely on non-free drivers for certain hardware (most commonly GPUs), and non-free user-space applications (such as Skype).