Simply put, this is a Position Jump that is triggered when "Loop Song" is enabled, and ignored when Loop Song is disabled. If there is pattern data following the effect data, then it will play as normal when the effect is ignored.
Like a normal Position Jump, this can be combined with a Pattern Break effect.

This could have an application in both games and music players, or anything for that matter that has multiple modules on a playlist but gives you the option to loop a single song indefinitely.