It will invert the waveform.... for example - if the waveform cycle starts-off with a positive slope, it inverts it so it becomes a negative slope.
An example of its use is in mic'ing of a snare from both top and bottom. The top mic's waveform will have the opposite polarity of the bottom mic's waveform - which can cause a thinning/flanging of the sound due to waveform cancellation. Flipping polarity on the bottom mic, allows both waveforms to sum correctly.