Basically its an amount of extra IPC one side starts with to spend however they please amongst any of that side’s nations.
I say, “I’ll play the Allies for an extra 18 IPC worth of units”.
Axis player says, “No, 5 IPC”.
I say, “I’ll play for 15”
Axis, “7”
I say, “I’ll play for 12”
Axis, “Okay, 10 IPC and we have a game”
I say, “Agreed”
Basically it is a house rule where one side says it needs more units because there are certainties such as Axis SeaLion on G3 that really cannot be stopped no matter what the opposing side does.
In my example, the Allies could then spend 10 IPC on any country (France, UK-Europe, UK-Pacific, Anzac, China, or USA) before the game starts. If the allies get an extra 12 IPC I’d put them on 4 Inf in France to force Germany to send Aircraft after it to take it.
In order for the Axis to make it a certainty that Paris falls, it will have to dedicate aircraft to beat 10 Inf, 2 Art, 2 Tanks, 1 Ftr and 1 AA gun. This then allows some of my UK fleet to survive with better odds or at worst take out more of the German Air Force to make SeaLion less of a certainty for the UK.
This dramatically changes the landscape of the game and is why there is discussion about adding or moving starting units to better “balance” the game to make SeaLion played by a competent German player less certain.
Hence why there is a “bid” to determine who plays the side that starts at a disadvantage (G3 SeaLion).
At least that is how I understand it working. I have never played with a bid before