In simple terms it allows you to use a laptop to actually reprogram the bikes own ECU. This differs from a Power Commander, Bazzaz etc which just modifies the signals sent from the stock ECU to the engine by plugging in line, where the source signal is unchanged.
The basic Woolich kit is essentially a wiring harness that allows you to plug your own computer into the ECU to make changes directly on the ECU itself, and the software to do it.
You can step it up to the next level as I have and get the 'log box' which records data onto an SD card from the bike in real time whilst you are riding in real world conditions. You then plug the bike back into your computer and it uses this data to generate new maps etc for your actual bike from data collected with true ram air effect etc etc. No dyno needed. You then rewrite the ECU with the new maps. Ride and repeat as many times as you like.
You can do it on a dyno if you want but I like the idea of true data from actual riding rather than simulated conditions on a dyno. You can go higher still and get log box pro but most will not need it and that allows for some serious data capture.
You can also get 'race tools' which on Gen 4 gives you quickshifter and some other bonuses, still from within the ECU. I have this also and it works very well. Better than other add on systems.
The install is easy if you are mechanically handy. The computer side of things I was wary about as I am fairly computer illiterate but found it all pretty simple.
This is a fairly simplistic explanation and there is a lot of stuff you can do with Woolich that PC cannot do but essentially that's it.