It creates a hyperlink that when clicked will display additional information below the hyperlink (the extra info "drops down" so to speak). It is used for paragraphs of information. The corresponding inline version is the Expanding Text feature.
Click in a blank paragraph and click the button. Then you can enter the text you want as the hyperlink (called the drop-down title), then in the blue-dashed box you can enter the text that you want to display when the link is clicked. See the help for more info and settings: https://helpx.adobe.com/robohelp/using/format-content.html#dropdown_text
(If the blue-dashed box doesn't display, check your settings in the View > Show menu. I personally find having it on very useful in the editor - it doesn't display in the output.)
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