I don't know from a developer perspective, but I already used this in some apps.

Basically if you have your "health device" (e.g. smartwatch, smart scale, ...) from manufacturer X which has an app, and you want to use a Tracking App Y (e.g. MyFitnessPal, Google Fit/Health, ...) and they both implement the Health Connect APIs, then you can setup a connection between those apps and toggle which stats they can exchange e.g. from the health device manufacturer your weight, your steps, your heartrate etc, and from the tracking app your meals you have logged and so on.

The last time I used this (has been a while) this was also integrated into the Android System Settings and was a relative "native" experience.