It basically does the same thing ZiPhone does. It unlocks, jailbreaks and activates an iPhone. With the new independence, it downgrades the modem firmware so that it can be unlocked. This also makes it possible to downgrade to 1.1.2 or 1.1.3.
I took one of my iPhones that was on 1.1.4, ran Independence on the phone, restored the phone to 1.1.3 and then used ZiPhone to unlock and jailbreak.