Power from the utility isn't perfectly steady. Voltage rises and falls all day, and now and then it spikes hard, from a grid event, a lightning strike, or even a large motor cycling inside your own home. A whole-home surge device sits at the main panel and watches that incoming voltage.
When voltage climbs past a safe level, a Type 2 device clamps it in an instant and diverts the excess energy to ground, before it reaches your AC, your electronics, or your appliances. The wiring downstream only ever sees power inside the safe range.
It doesn't generate or store power, and it isn't a battery backup. It's a gatekeeper. It catches the spikes coming in from the street and the ones born inside the house, so the surge stops at the panel instead of traveling out to everything plugged in.