In terms of security, it doesn't prevent someone with physical access to a Mac from booting into single user mode or use a password reset application on the boot volume to get in.  

What it does do is prevent casual 'attacks'.  It will make the login window act like "OS X Server".  It will not list out all the user accounts on the system.  It will also not let a random person reboot or shut down the machine without being logged in.  Attached are the two login screens.

![default-login](https://f.cloud.github.com/assets/177958/241105/0e2d4d54-8988-11e2-8a0e-6d5f2b9c96b7.png)
![modified-login](https://f.cloud.github.com/assets/177958/241106/0e3b86ee-8988-11e2-98aa-c0a51cc71ae0.png)