When you select this icon, the selected frame will be enlarged to the full size of the working window. This permits you to see the contents of this frame without having to go the the bother of setting the display magnification beforehand. – This also works with multiple frames: Here the magnification will be set so that all selected frames form a group that can just fit into the document window.
Tip: With the Locator module (available as an optional extra) you can extend the use of this function appreciably, as in that (among other factors) you can set how much margin is to be left visible around the displayed format-filling frame. This makes it much easier to use the frame's grab handles.