It's exactly what it sounds like! A single field into which you can add any raw HTML you'd like included on the page.
This may be necessary to create or modify sections of a page in ways the available content blocks are incapable of doing. With that said, part of the value of CMSs like Wordpress is the smaller amount of raw HTML that users write, so the need for this content block should be sparing.
The text editor of the body-text content block can also be used to add HTML. However, the HTML-raw content block can be easier to use for more complex work: switching back and forth between the visual and text editor of the body-text content block can "clean up" the HTML in ways you don't intend or desire.