Most adults can reliably remember around 7 digits — psychologists call this "the magical number seven, plus or minus two". Reaching 9 or 10 digits is an excellent score, and anything above 11 is exceptional.
It measures your digit span — the capacity of your short-term (working) memory for sequences. The number shown grows one digit longer each level, and the test ends the first time you type it back incorrectly.
Chunking is the most effective technique: group digits into twos or threes (like a phone number) rather than holding them individually. Saying the chunks to yourself in a rhythm also helps them stick.