It's for the time keepers at a race sanctioned event. Simply put, it emits a signal which a sensor in the track picks up and sends back to the time keepers computing system.
Each transponder has it's own unique code which identifies the car/bike to the computer.
At the end of the race the computer tabulates your best lap, total number of laps, average speed, finish position, and whatever else the organizing body chooses to display.
It does not provide any track data to you in the car. For that you would need a separate system.