CALIFORNIA AIR RESEARCH BOARD, CARB exempt means it does not have to follow CARB requirements. Cali has the most stringent emissions laws in the land, its how they are trying to reduce their polution.
Whenever you buy a part that says CARB EXEMPT, it means that it's legal to put on & you can smog the car. This is typically everythng from the intake all the way to the catalytic converter. The exhaust does not matter, other than the sound level. CARB exempt parts do not cause excess emissions. A lot of parts that are not CARB EXEMPT will not cause pollution as well, but since they don't have a CARB EO number on them, you can't pass a smog check. These parts are usually an intake, header, pulley, fuel rail, etc. Everything before the catalytic converter. It sucks being a gearhead & living in California.