It means that you can burn games and play them on your XBOX.
A flashed XBOX 360 doesn't need to be played with original XBOX Games, they can be backups!. So that's pretty much it. If you download 'em to your hard drive, you still need the disc, so.
when u save a game to your hard drive it doesnt read it off the disk so it takes longer for your disk drive to burnout u still need the disk it just protects against the 3 red lights and stuff