You wouldn't normally trade a developed B for a N still sat at home but I suppose after Bxb8... Rxb8. then e5 white forces the other N back to g8 and has a space advantage and better development while black is somewhat cramped.
What am I missing here?

If you play that out, BXKn,...RXB then you can P-c6 opening the queen file to trap the rook.
Don't think that works after c6... bxc6 and black can move Bc7 and the R's protected
Bxb8 is in essence a bad move. You don't want to trade developed pieces for undeveloped ones. You'd normally be helping black with that kind of move.
One idea that black could have is to develop by attacking your queen. If you play with your queen too early in the opening, your opponent can make developing moves that can attack that queen. While he's developing, you'd be running around with your queen, which is bad and inefficient. This is what they call developing with tempo. If it were black to move in that position, ...Nc6 would be clearly black's best move in the position, as he'd develop his knight by attacking your queen, thus gaining time.
If you look deeper at the position, it isn't quite so obvious how black could chase your queen away from d4 if he wouldn't have that Nc6 move. So Bxb8 would help you keep your queen in a very active position in the center of the board.
In practice Bxb8 would be a hard move to see and play. Like I said, it's illogical to trade a developed piece for an undeveloped one. The reason it would appear to work in this position is because white gets to keep his queen in a very active position for the time being, which helps white gaining the initiative, while also having a lead in development. To put it in plain English: white can start creating threats against black with his better developed and more active pieces.
I don't think it's the best move in the position for you specifically though. It's all nice to make sure you can keep activity for this moment with Bxb8 and gain the initiative, but having an active position is not at all easy to convert into something more tangible, like an extra pawn. Good dynamic play is incredibly hard to pull off. Playing with the initiative might be one of the hardest if not the hardest concepts in chess for a lot of people, with a lot of 2000 players not understanding it well enough either. Playing dynamically requires you to make threats and to make threats you need to know which move is a (strategical) threat and which move isn't. In essence, playing a natural developing move might be a lot easier for you at your current skill level.

i would probably Nc3 then 0 0 0
and when there are no real tactics or really strong positional moves sometimes comp evals in opening are weird
bxb8 rxb8, e5 ng8 (..nh5, g4), nc3. you have to see all the way up here and conclude that black has no way to coordinate himself or break white's grip in the center. you also have to think about what black will do if he gets a move in. he wants to play nc6 not only hitting the queen but also preparing e5 to hit the bishop too, and then he will overtake white in development. bxb8 eliminates all that and so black is left cramped.
bxb8 rxb8, e5 ng8 (..nh5, g4), nc3. you have to see all the way up here and conclude that black has no way to coordinate himself or break white's grip in the center. you also have to think about what black will do if he gets a move in. he wants to play nc6 not only hitting the queen but also preparing e5 to hit the bishop too, and then he will overtake white in development. bxb8 eliminates all that and so black is left cramped.
Yet this doesn't explain why white can't start with e5 in the current position in stead of Bxb8. After all, after 1. e5, Nc6; 2. Qd1 black also has to retreat with his knight to g8 and white has full control over the center as ...d6 is impossible to execute. Black is cramped there too.
i don't see your point. why do i need to explain that? i am not trying to mislead the op. i am also not all-seeing. but i am fairly certain that without the nb8 and bf4 white's position is a lot better than your version of it with qd1. he can castle long for one. you can't expect me to explain every single thing and not leave anything for the reader to work out for himself.

If you look deeper at the position, it isn't quite so obvious how black could chase your queen away from d4 if he wouldn't have that Nc6 move. So Bxb8 would help you keep your queen in a very active position in the center of the board.
Very insightful and quite interesting. This must be why the computer likes this move. Thanks!

Stockfish says Bxb8 is +2.03 and clearly better than the second best (Nd2). The continuation after ...Rxb8 is e5 Ng8 Nd2 b6 cxb6 Qxb6 Qxb6 Rxb6 0-0-0
What i can't work out is how you got to this position, it seems white has played 2 more moves than black, which explains the better position.

Stockfish says Bxb8 is +2.03 and clearly better than the second best (Nd2). The continuation after ...Rxb8 is e5 Ng8 Nd2 b6 cxb6 Qxb6 Qxb6 Rxb6 0-0-0
What i can't work out is how you got to this position, it seems white has played 2 more moves than black, which explains the better position.
He’s moved that knight three times, Ne4 (drawing my queen out), and then back. There’s probably better ways to deal with it than pushing the queen out there, but it’s annoying and I want it gone.
That’s great info, thanks!
When playing the bot Sven, I often end up in this position and the computer tells me that taking the knight on b8 is the best move. Why can't he just take back with the rook?