Substitution in an IR35 context is the question of whether the contractor must perform the work personally, or whether they have a genuine right to send someone else (a substitute) to do it in their place. Personal service is part of the irreducible minimum employment test, so a real right of substitution points away from employment.
For a substitution clause to carry weight it must be genuine and largely unfettered: the contractor pays the substitute themselves, and the client cannot unreasonably refuse a suitably qualified replacement. A clause that exists only on paper, that has never been used, or that the client can veto at will, is treated as a "sham" and carries little weight. As with the rest of the status test, the working practices override the wording.
A genuine right of substitution is one of the strongest outside-IR35 pointers available, but it is not a guarantee on its own. Even with a real substitution clause, the tribunal still weighs control, mutuality of obligation and the whole picture. Contractors should not rely on a substitution clause alone to claim outside status. See CEST, which tests substitution as one of its questions.