From CryptoWiki

"ERC-4337 introduces something called Account Abstraction, which allows Ethereum wallets to operate as smart contracts.

Still hazy? Here’s what it enables:

  1. Recovering lost private keys. There’s a new “social recovery system” where designated users have the ability to restore access to a wallet, should someone lose their private keys
  2. Securing wallets without a seed phrase. Users can enable 2FA and biometrics (fingerprint or facial scan) to protect their wallets. Sayonara to those 12-word seed phrases
  3. Carrying out automated payments and setting time-based spending limits (i.e. you can set monthly spending limits on a wallet)
  4. Sending gasless transactions. Decentralized applications can “sponsor” gas fees (aka cover the costs) to make things cheaper and simpler for their customers

Why does it matter? The upgrade enables a lot of the same features a bank offers, without needing to trust a bank.

By merging crypto wallets with smart contracts, Account Abstraction makes for more secure and efficient transactions, ultimately making crypto more user-friendly.

Plus, it makes some of the previously “impossible” stuff (like wallet recovery, seedless wallets, etc.) possible."