It simply brings Magento a bit closer to the current century by adding ajax functionality to the process producty are being loaded.
By scrolling down to the end of the product list, this Module will automatically load more products. It's some kinda technique Google's using for their Images Listing.
Just throw it into your Magento Installation and configure the Module within the Backend.
In order to build awesome stuff, you may probably take a look into the Infinite Ajax Scrolling Documentation - it's the script we're using for this Module - and jump into the template file. There's the magic.