It disables all the automatic network traffic (that we know about). Things like: time sync, windows update, remote assistance, file sync (offline files), error reporting, automatic codec download...
Its all paranoia. If MS have real spy software in it, it would not be documented in any way and you would not be able to turn it off.
Personally, I use it just to be in control of my computer. I'm happy to do things manually.
-Having a good knowledge of changes to your system in useful for diagnosing any problems that pop up.
-I also don't want any of this automatic updating to interfere....eg what If I was playing an online game and windows started downloading files...it would ruin my game.
EP, glad to see you come back and tidy up...did want to ask a one day favor, I want to enhance my resume , was hoping you could make me administrator for a day, if so, take me right off since I won't be here to do anything, and don't know the slightest about the board, but it would be nice putting "served administrator osnn", if can do, THANKS