The purpose of the software is, for example, to take a DVD Movie on a dual-layer disc, compressing it to a given size, then creating an ISO that can then be burned onto a single-layer disc.
Sure, there is some quality loss. Not noticeable by my old eyes. You also have control over what sub-elements are included which can amount to many MBs of data.
It's really a cool program that has saved me a bunch of money by not having to purchase expensive dual-layer discs to store my movies.