The Expand Bullet plugin allows users to transform bullet points into individual notes within Obsidian. By using a context menu option or command, users can create a new note from a selected bullet point. The plugin offers settings to remove the original bullet content, replace it with a link to the new note, and use the first line of the bullet as the note title. These features help streamline the process of breaking down information into separate notes, making it easier to manage and organize content.