A beacon is a low-energy Bluetooth transmitter that broadcasts an identifier and nothing else. Apple Wallet lets a pass list the beacons it is relevant near, using the iBeacon format, and when the phone hears one of them the pass surfaces on the lock screen with an optional line of text: "Your membership pass is ready."
It is the indoor half of pass relevance. Location relevance uses GPS and a radius, which works for a store in a street but not for the right store inside a mall, or a specific gate inside a venue. A beacon is precise to a few meters and works underground, so the pass appears at the turnstile, not somewhere in the building.
The pass declares each beacon by its proximity UUID, with optional major and minor values to distinguish one unit from another, plus the text to show. All of that lives in pass.json, and the wallet handles the listening; the pass itself runs no code. Google Wallet does not read beacons for pass relevance; its passes rely on location instead.
Beacons are worth deploying where the entrance is the moment. A gym, a club, an event venue, a members' lounge, each gains from the pass being on screen before the member reaches the reader. For most retail programs, auto-presentment over NFC already brings up the right pass as the phone meets the terminal, and a beacon adds hardware to maintain for a step the tap handles. Use them when the pass needs to be visible earlier than the tap.