An approval policy determines the different levels of document content that requires approval by members of a group of contributors or buyers assigned to that policy.
A policy can comprise one or more steps to complete the approval process. For example, the process of buying a particular item could be determined by approval at a certain level of detail (such as article, category and/or item) then subject to a two-stage approval process by a manager and other user.
For each policy, you choose who the policy applies to. It might be a certain group of users or an individual. You then choose the type of content that triggers the need for approval. For example, it might be items that belong to a certain category. You then define the approval steps. Again, this can be assigned to a group or individual user and you can add as many steps as you need in a heirarchy.