Well it does a number of things....
Makes a better job of getting the output size right, analysis of more video data to provide better encoding, allows you to use a higher file size than 4.32GB plus other things.
Whether you actually notice a vast difference in picture quality between IC8 produced DVDR's done with & without ICHSE is another thing altogether. At least by always using it you know that you should be getting the best possible MAX output size and analyisis for quality.