The veil of secrecy was pulled back a bit at the MLS All Star Game for a small group of reporters. Retention Funds were explained in a bit more detail than existed previously. Steve Davis over at ProSoccerTalk has a run down of that conversation.
The mechanism was designed to allow clubs to re-sign key players to new deals without pricing them into Designated Player territory. It was an effort to avoid damaging attrition, losing players we might classify as "above-average," or a few we would call "great" or perhaps "potentially great," to European clubs that might not look glamorous but could offer substantially greater compensation.
Most notable to Seattle Sounders fans is that the Jhon Kennedy Hurtado contract signed in the offseason is one of the 14 players revealed to get contract bumps through the new program. That means that only a portion of his salary is part of the cap. It also shows the perceived value of the one time great (2009) who is now in a three way competition for minutes with Ianni and Scott.
The full list of players shows that defenders and defensive mids are the focus of the new program so far.