The reaction proceeds in two steps:

1. Formation of Grignard Reagent: Benzyl bromide ($\text{C}_6\text{H}_5\text{CH}_2\text{Br}$) reacts with magnesium ($\text{Mg}$) in the presence of dry ether to form benzylmagnesium bromide ($\text{C}_6\text{H}_5\text{CH}_2\text{MgBr}$), which is a Grignard reagent . $\text{C}_6\text{H}_5\text{CH}_2\text{Br} + \text{Mg} \xrightarrow{\text{dry ether}} \text{C}_6\text{H}_5\text{CH}_2\text{MgBr}$
2. Hydrolysis: Grignard reagents are highly reactive and react with any source of a proton (like water, alcohols, or acids) to form corresponding hydrocarbons. Here, the addition of $\text{H}_3\text{O}^+$ (acidic hydrolysis) provides protons that react with the Grignard reagent to form toluene ($\text{C}_6\text{H}_5\text{CH}_3$). $\text{C}_6\text{H}_5\text{CH}_2\text{MgBr} + \text{H}_3\text{O}^+ \rightarrow \text{C}_6\text{H}_5\text{CH}_3 + \text{Mg}(\text{OH})\text{Br} + \text{H}^+$

Thus, the final product 'X' is toluene ($\text{C}_6\text{H}_5\text{CH}_3$).