That'll allow the two to purchase and repurchase Chinese yuan and euro from each other. Here's some of the ECB statement:
The swap agreement, which will be valid for three years, will have a maximum size of 350 billion yuan when yuan are provided to the ECB and of €45 billion when euro are provided to the PBC.
The ECB says that this arrangement is "intended to serve as a backstop liquidity facility and to reassure euro area banks of the continuous provision of Chinese yuan".
In the UK, the Bank of England already has already signed an agreement with the PBoC to establish a similar three year currency swap line. That line is worth 200bn yuan (£20.51bn).
But remember that the Chinese renminbi isn't fully convertible - part of the reason why European central banks haven't made these deals in the past.