The Supply Signal is a type of grenade in RUST that emits a purple smoke effect for a short period, used to summon an airdrop plane to the thrown location.
Supply signals are considered quite valuable and are also relatively rare to find. They sparingly drop from locked or elite crates, with an even smaller chance of them coming from military crates or certain scientist types.
The function of the supply signal is similar to any other grenade type; once added to the hot bar, the player may use it, tossing the supply signal forward. Once deployed, a large cloud of purple smoke will flood the area and loft high into the sky. This will remain for several moments.
In the meantime, a supply drop plane will spawn and make its way toward the drop zone. While not exact in placement, an airdrop will then begin to call from roughly within a half square of the area a player threw the supply signal.
Players will often trade these to clans with high walls that can better protect the loot. It is also common practice on higher-population servers to throw them out at sea on a boat and use diving gear to fetch the loot.