Using a RANDAO-based Random Number Generator, validators on the POA Network produce random numbers on-chain. These random seeds are also available for usage by any smart contracts deployed to POA Network.
An example application that relies on random numbers is POA Mania, a no-loss lottery which uses randomness to determine winners. Once a round completes, any user can close a round, which triggers a call to retrieve a random number and select a first, second and third place winner. However, rounds can only be closed during certain timeframes once a round is over. These timeframes correspond to a commit phase, when random numbers are committed to the chain by validators, and occur every 100 seconds. On-chain randomness is a 2 phase process, where validators commit numbers and later reveal them. To ensure that numbers are not known beforehand, contracts must restrict business logic to the commit phase.
It is important for applications to use a trusted source of randomness, and 3rd party randomness may be subject to manipulation. Randomness is difficult to achieve on-chain, especially in a deterministic system, and POA's unique RNG is providing true, reliable randomness for applications
More information on how the POA RNG works is available here.