The US Treasury is buying back $12.5 billion of its older, longer-term bonds (like 10+ year ones) from the market. To fund this, they're issuing new, shorter-term debt (like T-bills that mature in months).
This swap increases liquidity because short-term debt is easier and cheaper for investors to buy/sell, freeing up cash in the system without raising overall debt levels. It's a way to manage the debt portfolio more efficiently.