It’s where instead of playing the music through a loudspeaker, everyone gets their own headphones to listen to the music together. It allows you to hold a disco in a location where noise restrictions might otherwise apply, and it can be great for people with sensory issues to be able to control the volume they’re listening to or immediately turn it off if overwhelmed. It can also give the option of a few different music selections. (I think I saw one example where the headphones would show a different colour LED depending on which music you were listening to.)