The effect works by focusing on medium-, rather than pixel-sized chunks of an image. By moving the slider the other way, you can also accentuate details in bark or hair without increasing the noise or making bokeh look too sharp.
It can be used globally in a shot or in specific regions of a picture to make your subject's face softer without affecting their hair or lips (as shown in a very exaggerated way in the shot below). Suffice to say, the feature is bound to become popular with image-conscious social media types, portrait photographers and even landscape and wildlife shooters.
Adobe introduced some other new Lightroom features, like inspirational stock photos with interactive tutorials, a Google Drive-like "Share & Invite" collaboration tool, chromatic aberration defringing and more.
It's no doubt hoping to draw some attention away from recent bad news. Adobe recently told users they could only use the last two versions of Creative Cloud CC apps, reportedly due to a lawsuit it's fighting with Dolby. That has angered a lot of users, who prefer to use specific versions of the apps for speed, usability and stability (bug) reasons.