Specification by example is a way of writing down how something should work, so that everyone knows what to do. Imagine you are playing a game with your friends and you want to make sure everyone knows the rules. You might write down the rules, so nobody gets confused. This is like specification by example.
Let's say you want to make a cake with your mom. Instead of just telling her what you want your cake to taste like, you might show her how you want it to taste by giving her an example of a cake that you like. You might also show her how the cake should look by drawing a picture of it. This is like specification by example.
People use specification by example to help them understand and work together on projects. By giving clear examples of how something should work, they can make sure everyone is on the same page and knows what to do.