This modifier spawns particles from each particle in the level above it.
For example, if you have three levels and, in each of them, the Spawn Count is set to 10 and Frames is also set to 10 (with the xpEmitter emitting just one particle).
From that original particle in the emitter, the modifier will spawn 10 new particles - these are the 'level 1' particles.
This will give you a total of 11 particles after one frame.
Each subsequent frame, this step will be repeated, also spawning 10 particles from each of those spawned particles.
With this setup, after just 16 frames you will have 509,101 particles.
For this reason, it is prudent to keep the number of levels as low as possible (the same with the spawn count and number of frames to spawn for).
In addition, it is recommended to keep the lifespan of the spawned particles short so that huge numbers don't accumulate.
This modifier can be used to create such things as sparks from fireworks, but it can quickly slow your computer down without care.