In Windows 8 it's used for the "Boot to desktop" option so that it can skip the Metro Start Screen. In Windows 7, it doesn't currently do anything, but we're planning to use it to be able to set the Windows Logon Background in a future version, so that customers can have automatically rotating Windows Logon Backgrounds.

It's safe to disable that service in Windows 7 if you like, as it's not currently doing anything