A modular power supply unit (PSU) has cables that plug into the power supply rather than being permanently attached. You connect only the cables your system requires, leaving unused ones outside the case.
This contrasts with non-modular PSUs, which have all cables hard-wired to the unit. Semi-modular PSUs fall in the middle: some cables (typically the 24-pin motherboard and 8-pin CPU connectors) are fixed, while others are detachable.
The main benefits are cable management and airflow. Unused cables don't clutter your case, making it easier to route power leads neatly and allow better air circulation around components. This can help keep your system cooler, especially in smaller cases where space is tight.
In practice, if you're building a modest gaming PC with a graphics card and a few drives, you might disconnect cables for extra SATA ports or PCIe connectors you won't use. A high-end workstation with multiple storage drives and power-hungry GPUs would use most of the available connectors anyway.
When shopping, check the cable gauge (thickness) and ensure the PSU has enough connectors for your planned setup. Modular PSUs tend to cost more than fixed equivalents at the same wattage, but they're worth considering if your case is cramped or you value a tidy interior. Look for reputable brands that use high-quality connectors, since poor contact reliability can cause problems.