It allows you to bind a spell/macro to a key without having to have that spell/macro on a bar. ie, binds directly to the slot in your spellbook or macro window.
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"You'd be surprised how many people violate this simple principle every day of their lives and try to fit square pegs into round holes, ignoring the clear reality that Things Are As They Are." -Benjamin Hoff, The Tao of Pooh
As it says, it allows you to bind keys directly to your spell book.
So you want Power Word: Fortitude to be the F key, you bind it to it.
Want disenchant to be D? you bind it to it.
Then when you want to buff someone, you press F and the spell is cast.
Want to DE something in a dungeon you press D and click the item you want to DE.
For our example, Power Word:Fortitude, you don't even need it on on the hotbar. F is the PW:F key.