From Shams:

Harden could have waived that option to become a free agent at the end of this season.

What happens here is that Bird rights carry over, so Harden would have been able to sign for five-years and $269 million if he opted out. Instead, he’s basically guaranteeing he gets his $47 million next year and then can sign four years around $223 million, so by doing what he’s doing he’s earning a little bit more money.

Couple of explainers here: