Stitcher Geralf

“Exiled this way” refers to the exile instruction that's part of the ability's effect. If the cards each player would put into their graveyard are exiled because of a replacement effect, those cards won't be in the graveyards to be exiled by the next part of the ability. In this case, the value of X will be 0. You'll put a 0/0 token onto the battlefield, then that token will die and subsequently cease to exist (unless something else raises its toughness above 0).