Here in the documentation comment for
Note: Currently, this only works for entity types provided with the entity CRUD API.
So, what does it actually mean?
We are going to create two modules. One for defining an entity type using
hook_entity_info() and other providing UI for adding, editing, managing etc. There will be two drupal 7 installations. One will be installed with both of above modules and other only with first module defining entity type.
On first drupal installation, we will be creating/editing entities of type what we defined. And exported to second installation. So, we are checking for the capabilities of
entity_import() functions for integration of entity export/import functionality.