What Supervision provides is the ability to review (“supervise”) inbound/outbound data for your organization. This is not a data loss prevention (DLP) solution; DLP is already provided through the Office 365 service. What Supervision does is provide you the ability to create policies to monitor communications and designate reviewers who perform that monitoring (“supervision”). Supervision can be done on more than just Office 365 data; if there is inbound/outbound data (including data going to Facebook, Twitter, etc.), these reviewers can review data that meets criteria.
When creating a policy you have the ability to scope it to users, groups of users, and specify complex search criteria to identify the data. For instance, you may have scenarios where you need to monitor how different groups within your organization talk with each other (i.e. make sure conversations are being firewalled) or you need to monitor communications are that are going external from your organization.
Reviewers then have the ability to review messages that fall within a policy and then mark them as compliant, non-compliant, questionable and resolved communications. Then you use Supervision reports to review policy compliance.
Announcement - https://techcommunity.microsoft.com/t5/Security-Privacy-and-Compliance/Announcing-GA-of-Supervision-in-Office-365-Advanced-Data/ba-p/69344
Supervision Policies - https://support.office.com/en-us/article/Configure-supervision-policies-for-your-organization-d14ae7c3-fcb0-4a03-967b-cbed861bb086?ui=en-US&rs=en-US&ad=US
Supervision Reports - https://support.office.com/en-us/article/Supervision-reports-2a762db5-e1c9-4c09-aa8e-bef49ce97209
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