Estate bonds may be required by state law, or they may be required if the deceased person's explicitly requested it in their Will.
The bond amount is typically based on the total value of the estate, and must be purchased from a Surety company. Typically, the executor pays a premium, usually a percentage of the full bond amount, and it will then remain in effect until the estate is fully distributed, and the executor has completed all of their legal duties.
If the executor fails to fulfill their obligations, or causes financial harm to the estate, a claim can be made against the estate bond. The surety company will investigate the claim, and if it is found to be valid, compensate the estate's beneficiaries up to the bond amount.