This block creates a special relative parent-child list of hierarchical post types.
It works in next way.
If you are page that is not current – All top-level items are visible
If you are on page which is current for any item in list – All top-level pages are visible, the current page is highlighted and the child pages of current are visible
If you are on a page that is a child – All top-level items are visible, the current page is highlighted and the parent page is highlighted.
You can find such list on most of the documentation sites and Wiki sites.
Check sidebar example
From the technical side, this is analog to wp_list_pages function but with Design options for parent, active, child items and visual interface