Om, I am not much good to you here, it isn't explained in a way I can re word. I shal try...
The basic gist of it is..... We are trying to see if our ears can pick the correct chords to go with the music. So open up a simple album and play it (press s) then have a go at playing the left hand. Then have a go at playing the left hand by ear with the notes hidden. By doing this you are developing your ability to pick out a matching chord to go with a tune. This is incredibly useful for learning guitar and composing. Which may seem a long way off but...my kids are already doing it. They compose with their right hand melody only, so they really need to learn this skill! Once you can pick out chords, it's an easy translation to learning a few chords on guitar and playing songs on guitar ( which let's face it all boys want to do one day!)
Personally I find this really difficult. But I can see it's has great value long term. So I will get stuck into it. It's a skill I wish I learnt as a kid!
The point is to listen to the notes in the melody and see if you can find some chords to match, that don't sound rotten!

In traditional music lessons this is taught in a very inorganic boring way! Memorization of matching combinations usually! Yuck! This way is much more fun and useful.
Does that help, any more questions?