Its use to stop trains further away form the next signal. And you use it by place it with the arrow pointed towards the signal you want it to respond to.
Lets say you have a signal before a turnout, and you have a grade crossing just before the signal. You want a AI train to stop at the signal if it is red, but you dont want the AI train to block the grade crossing. You put the signal offset asset where you want the train to stop, and point it towards the signal. Now the AI train will stop several feet away from the signal and keep the grade crossing clear.