Hey there
All that does is sync the PFs as mail-enabled objects so they can be seen in the Outlook GAL by your Exchange Online Mailboxes.
It also allows you to give send as permissions for 365 mailboxes to those objects that represent the PFs - as well as make them "viewable" by any transport rules you may create in Exchange Online.
Note that they will show up as contacts in Exchange Online, not public folders.
Its not absolutely required that you sync these by the way. Your Exchange Online mailboxes will still be able to access the on-prem Public Folders even if you dont do this step.