The passphrase feature on Ledger effectively adds an additional word to your seed phrase, resulting in a different key and a different set of addresses. This is typically used to add an additional layer of security to your Ledger.
Read more about it here: https://www.ledger.com/academy/passphrase-an-advanced-security-feature
You can also use this feature to create a separate set of accounts on the same Ledger device to use with Xverse. This is recommended because by default, Xverse and Ledger Live will generate and manage the same set of accounts. This can lead to unintentional transfers of your Ordinals assets. For more information on this, please see: https://support.xverse.app/hc/en-us/articles/17898446492557-Why-can-t-I-use-Xverse-and-Ledger-Live-with-the-same-Ledger-device-
To set up a passphrase with your Ledger device, follow the steps in this guide: https://support.ledger.com/hc/en-us/articles/115005214529-How-to-set-up-a-passphrase-?docs=true
Once you have set up the passphrase and made sure you recorded it securely, you can proceed to connect your device with Xverse. You can follow the shown steps to set up your Ledger account in Xverse and manage your Bitcoin and Ordinals assets.