They increase the supply of all hexes within the supply radius by one 'level' to see what I mean, turn on perhex supply levels. away from suply units, rail connected to supply points, and roads close to rail/supply points will have the effective supply level, roads farther out, and plains next to the road/rail hexes will have 75% supply, with progressively less at farther distances, more diffuclt terrain. near a supply unit, open terrain will have the same maximum supply as the roads/rails running trhough it, forrests will have 75% instead of 50%, etc. IF you're completely out of supply a supply unit won't do any good at all.
In addition, cooperating units stacked with or adjacent to a supply unit get 50% more supply, this is independent of the unit being next to an HQ, which has the same effect, or not. Counter intuitively, the base supply level is only 66% of the value shown on the map, so a unit next to a HQ or supply unit will get 100%, one next to both 150% of the stated level. All this modified by the formation supply level ofc.