means if you craft blue or green quality item it has a better chance to be crafted as an "exceptional" item that item will have a random enhancement slot, pretty much if you put an enhancement in this will make that gear equivalent ( by base stats) to a gear that is 1 tire above for example
if you get upgradeable green after upgrading it will become equivalent of blue quality, upgradeable blue will become equivalent to purple of the same lvl and so on.
Do not confuse with orange gear, the blue gear will not have its damage or armor stat upgraded upon putting in enhancements if there is a slot all that will happen is a raw stat boost.