Restricted mode was created to protect iPhones against USB devices used by law enforcement to crack your passcode and get around encryption. It disables USB access after the phone has been locked for an hour, instead of a week as was previously the rule. To see the new mode toggle, drop into your Settings app and look under Touch ID (or Face ID if you have an iPhone X). There will be a new toggle button for USB Accessories there. Access is already disabled by default, so toggling it on with a tap will allow access for USB accessories.

Update 7/9/18 4:45PM: This post has been edited to more accurately reflect how the toggle switch works.