it's a tool used to reload the system menu with some patches applied to allow debug tools (WiiRd for example), disable the Anti-copy flag for savegames so you can copy them to SD card, etc.
There's also a disc launcher (for retail disc, or burned disc if you have a modchip), it can be used to bypass the Update message if you are still on an old system menu version, or to apply cheat codes to the game.
The channels can also be launched with cheat codes.
If you launch a game disc which require an IOS that you don't have (if you are still on an old system menu version and never installed the IOS manually) it will install it using the game's update partition. Only that IOS is installed, not the full update.