LVS guides a spacecraft's landing by taking pictures of what's directly below it as it descends. It then compares what it sees to its onboard map, detecting its precise location and determining whether it's in danger of, say, smashing against a boulder or landing too close to a cliff. If it detects anything that could jeopardize the rover's safety, the system steers it towards somewhere that's safer to land.
By the end of the test flight, LVS was successfully able to guide Masten's rocket back to the ground. Andrew Johnson, who serves as the project's principal investigator, said they were able to "show a closed loop pinpoint landing demo that eliminated any technical concerns with flying the Lander Vision System on Mars 2020" during the test. By starting its journey from locations its older siblings weren't able to go to, Mars 2020 would be able to beam back new data and photos of the red planet more interesting than what we're used to seeing today.