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Modern Standby is Microsoft's branding for "alternate sleep modes" (ASM), a feature that was added to the ATX12V spec in v2.51. Google calls this feature "Lucid Sleep" on Chrome OS.
ATX Version 2.52 further refines how many ASM cycles a power supply must be able to do per year.
Intel has a very long PDF on "ATX multi rail desktop platform power supply design guides" that seems to be hard to link to, but shouldn't be too hard to search - the specific changes to allow ASM support include the amount of time a power supply must take to wake from standby, and how it should behave to signal that it is ready to switch on. As an example, power-on time T1 - the time between when the power supply is commanded on out of standby mode to when it actually starts supplying 95% of its rated output voltage - should be less than 150 ms for a ASM power supply, but only has to be less than 500 ms for non-ASM. There are also guidelines for how much current standby rails should be capable of supplying and how efficient they should be when supplying that power.
It's a subtle thing that the user doesn't really notice, except as things acting flaky (because the power supply is browning out, cutting out, or taking too long to respond) or as the power supply just using too much power when the system is not in use.
I have been extremely frustrated in trying to find ASM/Modern Standby capable power supplies that aren't 800+ watt gaming units. The whole ATX 3.0 thing with the new high power plug is at least making more supplies available that are newer than the old v2.31 standard, but for now they're all still in the high end price bracket and high powered units that are totally unnecessary for (say) an office machine.
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