Actually it do both, it strip from the manifest and also avoid copying them in the xpi:
 - manifest: https://github.com/ochameau/addon-sdk/blob/3740af6ad7d533abb176925b0e37e373eb2277d4/python-lib/cuddlefish/manifest.py#L274
 - xpi: https://github.com/ochameau/addon-sdk/blob/3740af6ad7d533abb176925b0e37e373eb2277d4/python-lib/cuddlefish/xpi.py#L88

I tried to simplify all these naming by using:
--strip-sdk --> options.bundle_sdk  --> harness_options['is-sdk-bundled']
--force-use-bundled-sdk --> options.force_use_bundled_sdk  -> harness_options['force-use-bundled-sdk']
  (I know this option is long, but it is only meant to debug the sdk on bundled sdk version on FF 21+, so it should be quite rare to use it.)

So no more strip_sdk, instead --strip-sdk maps to bundle_sdk. And in the next release we will change the default value of bundle_sdk to False and rename --strip-sdk to --bundle-sdk.