It allows a franchise to convert a player (specifically on a non-guaranteed one-year minimum) to a two-way contract. A player can sign for an Exhibit 10 bonus of up to $50,000. If converted, the two-way contract is guaranteed for that amount.
It's essentially a Summer League/training camp tryout. The team in question has until the start of the regular season to convert into a two-way.
According to the story I've linked below, the amount of the bonus is flexible and in 2023-24 was as high as $75,000
The player can also accept an assignment to the franchise's G League affiliate as an affiliate player. If the player spends 60 days with the G League team, he can receive whatever bonus he had previously agreed to.