It's a replacement firmware for the DS. It allows you to boot Slot2 flashcards in DS mode, enabling you to run NDS ROMs and homebrew ffrom Slot2 flashcards. To put it another way, if you flash your DS with FlashMe, you don't need a Passcard.
Also, Download Play from another DS with a flashcard only works if your DS is flashed. And with some later versions of DS Phat, Flashme gives you several levels of backlight intensity, like on the DS Lite.