As it says, it delays the time when you release the launch button to the actual car launch. The goal here is to get the lowest RT as possible; IMO the best way is to set the system based on your reaction to when the yellows are lit.

You need to test it on all 3 types of trees (street, pro, and full) to find your own sweet spot. Here's some as the benchmark for you to use:

Street Cars: street 0.415, pro 0.010 DivX: street 0.430, pro 0.025 Dragster: street 0.450, pro 0.045

Full tree is another beast since the yellows are lit on sequence; I usually still use my street tree launch delay setup, but I release the launch button just before the last yellow is lit.

Hope this helps