In a moderated usability test, a researcher will be on hand to facilitate the test in real-time. In a remote setting, the researcher will observe the participant remotely via their testing software tool.
During the test, the moderator will ask the participant questions, guiding them through the session to understand their behavior and discover potential usability issues.
Typically, you'll create a test script ahead of the session as a form of structure—but the perk of being in a live setting is that you can ask questions on the fly. For example, if a user interacts with your solution in an unexpected way, you can find out why there and then.
Another cool thing about moderated testing is that you can invite stakeholders and teammates to observe the session anonymously. From our experience, when stakeholders watch a test first-hand, they start to grasp the benefits of user research and are more likely to champion further projects.