10 days is a common time limit used by banks when they are selling a foreclosed home. It means the seller is asking you to complete all of your inspections and investigations within that amount of time.
Releasing physical contingencies is a critical stage of deciding whether or not you want to commit to the purchase. Once you release your physical contingencies, you've basically agreed to accept the physical condition of the home as is.
Depending on how your purchase agreement is written, you will probably still retain the safety net of loan and appraisal contingencies, among others.
There is a lot more to all of this, so I hope you find (or are using) a buyers' agent you trust, who can explain the intricacies until you understand it completely before making a decision.