I've never played a server with this feature. How does it work?

It's basically a rested Exp buff. If you are offline, or AFK in town for 48 hours, it will regen up to 200% EXP bonus. As you gain experience, it's depleted. 

Ok, so when you have the bonus after being AFK or offline, you need to hunt until it is depleted to take advantage of it? Correct?

It's a boost to XP that you get if your character gets after level 49.

The faster you gain XP the faster it depletes. It doesn't mean that it boosts at the ratio of 1% of Einhasad 1% current level. It is less.

It increases (to max amount of 200%) when you are AFK or offline in a town (or safety zone, not sure. Have to test).

Thank you