I think the idea is that if there is some tension in the cords, it'll squish the rubber in an open crack back closed when the tire is inverted, especially if it has a thick tread.

So, in theory, you save a boot, and it keeps the tube from bulging out.

It may work for a short ride, but one risks further damage to the cords, and any remaining structure could fail catastrophically.

This might only work with certain between types of damage. If the hole is small, it is unnecessary, and if it is too big to conveniently boot, I doubt one would have much success with inverting.