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'USB Keyboard and Mouse Simulator' option in BIOS, what does it do?

Level 7
Was just curious about what the 'USB Keyboard and Mouse Simulator' option in BIOS does?

From Google searching it seemed that people were using it when their mouse/keyboard weren't being picked up outside of the BIOS screen (in windows, etc) but I'm still not sure exactly what it is doing.

The description says something about simulating keyboard/mouse to PS/2 module in Windows 7 but still confused as to exactly what that means.

Basically, I was just fiddling around while playing Overwatch and either it's placebo or I can feel a difference in my mouse "feel" depending on whether or not I have the setting enabled or not. Could be placebo but I could almost swear my mouse aim feels more stable when I have it enabled...

Would the setting have any effect on mouse feel in Windows?

Some posts I read said it might have something to do with a 'xHCI handoff' setting that used to be there in older versions of the BIOS?