Signing with an independent publisher means venturing outside the traditional models of publishing. Depending on your personality and goals, that can be scary or exciting. Your potential publisher seems to be offering an alternative based on the concept of partnership publishing. That is, instead of offering an advance, they offer higher royalties than traditional publishers with the belief that you’ll be more inclined to participate in the bookselling process—especially the marketing part—in exchange for that larger royalty. Hence their inquiry about the number of promo copies you’d like to buy. The unusual part of that is that they’re asking; usually publishers specify the number. That’s certainly the case with traditional publishers, who’ll only give you a few free copies unless you negotiate otherwise. After that, you have to buy more promo copies, usually at a deep author discount.
The key word here is ‘negotiate.’ Some terms should be negotiable, such as the royalty rate, the number of free copies, and your author discount. Don’t be afraid to negotiate. ‘Partnership’ works both ways.