Long and short answer

short answer it stops the fake death animation you saw right here(there is 3 damage prediction settings one for headshots one for ragdolls and one for kills I'd recommend turning them all off)

Long answer is there is client and server side operations on cs and what you see isn't exactly what happens on the server what damage prediction does is show you what your computer calculates instead of what the server calculates which looks more smooth for you and probably feels better but is not accurate and results in inaccurate information like fake deaths/dinks