The redemption rate is the conversion rate used to compute the value of the points your customers have accumulated.
The default redemption rate is: 100 points can be redeemed in exchange for 1 unit of your store's currency. If your store currency is USD, it means, for every 100 points customers accumulate, they will get a $1 discount. A customer that has 700 points will get a $7 discount and so on.
The default redemption rate is the best rate to, psychologically, maximize customers' engagement in your rewards program. When a customer has 3,700 points it is very easy for them to understand how much benefit they get when you set a redemption rate of 100 points to $1 instead of 250 points to $1. It is not currently possible to change the redemption rate, but you can set the maximum discount a customer can get while redeeming and limit the redemption against selected products.