This is to prevent your customers from either getting quotes or booking events during those dates. By default black out dates cause your items to show unavailable. You can change this per date by unchecking the "Show Unavailable" box.
When showing the black outs as unavailable, if you have your Online Quoting set to show the customer your availability, black out availability will be included. On the admin side, items will show as red and in conflict with black out as the reason when you click the red availability number. You can override by moving the status of the lead up to a reserved status. At that point we assume you are intentionally overriding your black out and booking an event manually. You will no longer see the items in red and showing conflict even though the black out exists. You may still be warning messages though.
Blackout Dates will not affect existing booked events, so it can be used to prevent further bookings if a particular date gets too busy to accommodate any more events.