As the name suggests, activating this setting puts your device into low power mode. And it really does work, giving you about three hours of extra battery life. If you are worried about your battery not making it through the day, this is the setting to activate.
However, it achieves this by turning off or reducing mail fetch, background app refresh, automatic downloads, and some visual effects.
iOS offers to turn on Low Power Mode when your battery goes below 20% and 10%, and will turn it off when the device is charged to 80%.
You can also turn this on manually, either from the Control Center panel, or from Settings > Battery.