Replace in string is a simple search and replace. It also supports regular expressions and group references. group references are picked up in the replace by string as $n where n is the number of the group.
You could parse out sections of a string as follows
regex = ^([0-9]{4})([0-9]{7})$
replace with = $2
This will replace any 11 digit numbers with the last 7 digits.
All fields of this step support metadata injection. You can use this step with ETL Metadata Injection to pass metadata to your transformation at runtime.