Exposition conveys information to the reader. It’s often used in the opening of a story to establish what the reader needs to know before the story begins, like character backstory, for example. It’s also used in transitions, allowing the author to jump over passages of time where it’s unnecessary to show scene.
Here's an example of exposition from the opening of my literary novel, The Spawning Grounds. You'll see I went so far as to slip in a little environmental lecture in this patch of exposition. I usually discourage the writers I work with from "lecturing," but I felt this information was necessary to the story:
"Hannah had arranged to miss the coming week of classes in her environmental studies program to save the fish, to carry them upriver alongside a handful of other volunteers from the reserve. Her instructors understood. Every living thing around them depended on the return of the salmon. The rotting fish would nourish the water this fall and again in early spring when the sun warmed what was left of the sockeye's frozen bodies. Their flesh would feed the tiny creatures that in turn fed the sockeye fry when they burst from their stone nests come spring. In this way, the sockeye fed their young with their own bodies and were resurrected within their children's flesh. If not enough sockeye returned during this run, if not enough died here, the river would starve, the sockeye fry would starve, the lake would starve, the eagles and bears and the land around them would starve."
Here, I’m telling the reader something; I’m passing on information. In the phrase, “show, don’t tell,” exposition is “tell.” Generally, it’s much easier to write exposition than it is to write scene. That’s one of the reasons apprentice writers tend to overuse exposition. Our early writing and the rough drafts of even experienced writers are often full of exposition, telling, explaining. And in our discovery draft, that’s okay. Exposition provides a sketch of what’s to come. In the revision process, you can unpack much of that exposition into scene.
Also, keep in mind that there are no rules to writing, only effects. The balance of exposition to scene in fiction is somewhat a matter of taste. In the past, a novelist could impose great long passages of exposition and description on their reader. But modern expectations have been so heavily influenced by film that it is the norm, now, to present the bulk of the novel or story in scenes, and that’s especially true for writing aimed at a younger audience. Readers just don’t have a lot of patience, anymore, for large chunks of description and exposition. Exposition stalls narrative drive, that tension that keeps the reader reading. It's like this: the reader is driving along in the scene when, thunk, a big chunk of exposition falls on the road right in front of them. The story comes to a screeching hault.
Still, exposition is a necessary and useful tool in the fiction writer's toolbox. It's just that a little goes a long way, and you need to be sneaky about tucking it into your story.
Want to know more? Check out this blog on Handling Your Exposition.