It is an endorsement stating that a specific person is not covered when driving the insured vehicle. It can lower the premium on a household policy, and it means there is no coverage at all if that person drives.
More detail
Exclusions are a legitimate tool and a sharp one. The upside is direct: removing a flagged driver from a household policy removes the surcharge their record carries. The downside is absolute rather than partial. It is not reduced coverage, it is none, and an at-fault accident by the excluded driver in that vehicle exposes the household personally. In practice an exclusion makes sense when the excluded driver genuinely has their own vehicle and their own policy, and keys do not move between them. It makes very little sense in a household where everyone drives everything. It is also worth noting that an exclusion does nothing about the excluded driver own proof requirement, which still has to be satisfied by a policy in their name.