This indicator is used to filter out the "poor fit" trades in your strategy. If you have a trend following or mean reverting strategy, you'll definitely want a filter indicator that tells you what the market state is!
Easy to interpret:
Yellow is Sideways (or reverting)
Blue is trending
Solid colors are more confident than faded colors
I'm already using this indicator with a Trend following strategy on Forex pairs to avoid potentially bad trades. So far, so good.