Proposition 7 introduced a form of optional (or facultative) referendum on ordinary statutes.
This means that a proposed law passed by the state legislature must be put before the electorate if a specific number of voters sign a petition requesting a referendum.
This means that a certain number of voters can propose an entirely new statute or constitutional amendment, which then must be put to a vote of the people.
The amendment altered the state constitution by rewriting and adding a long set of provisions to Article 4, Section 1, which dealt with the legislature.
As amended, the section began, The legislative power of this state shall be vested in a senate and assembly which shall be designated "The legislature of the State of California," but the people reserve to themselves the power to propose laws and amendments to the constitution, and to adopt or reject the same, at the polls independent of the legislature, and also reserve the power, at their own option, to so adopt or reject any act, or section or part of any act, passed by the legislature.