I don't know specifically what it does. I seems to just avoid sending signals to the screen i.e. leaves them blank. My stuff doesn't have any protect/unprotect commands but does have lots of charts and sort commands. For macros that are just calculations and no charts to update the slowness is not nearly as apparent.
The Mac Excel 2011 has the no-screen-updating built in but doesn't blank out the screens -- it just didn't update anything until it is done with the macros. Much, much Better.