A seed gets transformed into a second seed by adding a so-called offset passphrase. That second seed is worthless to anybody who doesn't also know that passphrase and can subtract it from it to again arrive at the original seed. Imagine to write down the 4-digit PIN for your bank card as backup but adding 1234 to it first, so it's worthless to anybody not knowing that and trying to use directly the "transformed" PIN.
So this is not true encryption for seeds, and no password protection for seeds either, but still enhances overall security because you have to know two things in order to use it (the transformed seed plus the offset passphrase).
The transformed seed is a perfectly valid Monero seed; you could transfer a little XMR to it to achieve what is called plausible deniability: If forced to tell somebody your seed give them the transformed one and swear that all the XMR you own are there.
This is the same method used by the Monero CLI wallet with the encrypted_seed command and the passphrase parameter when restoring a wallet from seed.