You haven't quite gotten the meaning of the exponential notation correct, which is why you're confused

A function of an operator is defined by its series expansion,
[tex]f(\hat{D}) = f_0 + f_1 \hat{D} + f_2 \hat{D}^2 + \cdots[/tex]
Typically the function
f is one that can be expanded in a Maclaurin series (Taylor series around 0), so in that case the coefficients [itex]f_n[/itex] are just the same coefficients that appear in the Maclaurin series:
[tex]f_n = \frac{1}{n!}f^{(n)}(0)[/tex]
For the exponential function, the series is
[tex]e^x = 1 + x + \frac{x^2}{2} + \cdots[/tex]
so the operator [tex]e^{\hat{D}}[/tex] is defined as
[tex]e^{\hat{D}} = 1 + \hat{D} + \frac{\hat{D}^2}{2} + \cdots[/tex]
In your case, [itex]\hat{D}[/itex] is multiplication by a constant composed with the derivative operator [itex]\mathrm{d}/\mathrm{d}x[/itex], so the notation [itex]\hat{D}^n[/itex] is effectively telling you to take the
n'th derivative and then multiply by [itex]b^n[/itex]. This would of course be applied to whatever the operator is acting on - for example, in
[tex]e^{b\mathrm{d}/\mathrm{d}x}\psi(x)[/tex]
each term would be produced by differentiating ψ(x) some number of times and then multiplying by
b that many times.