Q: What is this production beard you speak of? What will the beard produce?
A: Basically the involved devs do some funky things with their facial hair during game production. See here.
Q: Why would they do that?
A: Because they are cool guys who aren't afraid of anything.
Q: What is the purpose of this anyway?
A: It challenges the devs into accepting it. Which in its turn challenges the backers into reaching a funding of 4 millions. IMO a really amazing feat that will help in bringing the best game possible.
Q: What does it all mean!? How does it work?
A: Obsidian will have to