You Can’t Earn Exotic Engrams, But You Can Still Level Up
With Bungie’s implementation of private matches in Destiny, they had to make sure that this new feature couldn’t be easily exploited by players who just wanted to earn all the best gear and loot. With that in mind, you can’t actually earn Exotic engrams or drops like you normally would in ordinary Crucible games by playing in private matches. However, you can still level up your armor and weapons, and gain Motes of Light.
This means that if you want to unlock new upgrades for your gear, just having fun and playing against your friends in private matches will do the trick as well, and you won’t have to grind it out in the PVE content. You can also complete your daily PVP bounties in private matches.