I think it may tell Xcode how to talk to your device. I installed the pkg, and the next time I booted up Xcode it wanted to install it further (and wanted to close iTunes to do so).
I hope some day they remove the syncing and OS update from iTunes and put it into some kind of standalone application. Its ridiculous that all this is together in the same app.
EDIT: the Xcode installer gives these details:
Device Support
Provides device connectivity for development