What it does is limit the amount of pressure that your boost control solenoid sees. Your solenoid opens at a certain amount of pressure. Without the pill, pressure builds too quickly and your wastegate opens too soon (about 7 psi usually). With the pill you can build more boost before the solenoid sees the target pressre.
what he said. And in the past some tuners used to use a smaller pill to hit higher boost levels, to help people not hitting target boost. If that line coming off the turbo was say, blocked, your WG would see no pressure, and you would over boost. So at the extremes, like cosmo said, no pill equals WG boost, and a blocked line would equal OVERboost. if you don't know, the brass pill is in the compressor line coming off the T in the turbo hose system.