The difference is the long-term swap rate minus the short-term swap rate, and it reflects the slope of the yield curve. The lower the correlation between the two swap rates, the more the difference varies and the higher the premium.
Consider a hypothetical example in which a buyer purchases a call with a strike of 0.50% on a notional amount of 10 billion yen. The buyer receives 50 million yen when the difference on the observation date is 1.00%, and receives nothing when the difference is 0.50% or lower. The buyer loses the premium if the difference does not exceed the strike.