A sabbatical is basically an extended break from or leave from your job.
It can paid, unpaid or partially paid.
It can be for 1-3 months or more.
Some sabbaticals require the employee to undertake specific tasks, activities, further education, etc.
I think the benefits of a sabbatical, to both the employee and the organisation are self-explanatory.
However, if you're going to allow sabbaticals, you should certainly be having some robust discussions about your official Sabbatical Policy.