This enables the on the fly compression of the html content of the site. It makes the pages transfer faster and keeps the traffic lower.
It should not be used when your site has activated the global zlib compression.
Other than that, use it.
If your site has php and you want to enable the compression globally also for html files, put this into your .htaccess file in the root folder of your website:
AddType application/x-httpd-php .php .html .htm
DirectoryIndex index.html index.htm index.php
php_flag zlib.output_compression on
php_value zlib.output_compression_level 1
The first line enables parsing of html files by php, the last 2 lines enable the compression and specify the compression ratio, level 1 ist the least, but fastest compression.
The difference in the compression between level 1(very fast) and for instance 5(slow) is only a few percents.