Well, it disables Direct Storage for the game. DS allows game to directly talk to the drive, rather than via the OS. But for some and in only some cases, this causes issues. We used to have to delete the Direct Storage files in the game folder prior to every launch of the game, but with this command that is no longer needed.
There are other commands that are known, you can find them here under the battlenet section for command lines in my as yet incomplete tech thread (one of these days I need to finish compiling this):
-Current list of known fixes and work arounds from the community and other sources!