To make sure affiliate link cookies are activated upon page visit and not by link clicking.
It simply makes a very very small iframe to the url where you would direct your visitor to and it generates a link that will be displayed in your post or page. The iframe should be able to receive the cookie.
Sometimes when you use an affiliate url the visitor does not click on your link but will for example search the supplier on google. That way you would loose the commision you would have received if the visitor would have clicked on your link. So this way you can avoid this.
No, it is very basic. If your visitor does not allow cookies, this plugin won't help that.
In some cases it is not legal to use this way of affiliate linking. In some countries it might not be allowed by law. Please check this before you use it. Also in some cases it might not be allowed by your affiliate link provider. Please be wise and check this! I do not have a list of countries where it is allowed and where not.