Its only impact happens when the AI is spawning new reinforcement ships:
1) First, it computes the % of ships from that reinforcement that should be pre-emptive.
- Intensity 1 gives 5%, Intensity 10 gives 100%, the others are somewhere inbetween (not linearly, but you get the idea).
2) Then, for that % of the ships it spawns during that reinforcement event, it simply marks those ships as threat rather than telling them to guard the things they spawned at. They do still spawn where they normally would have, but they won't stay there long.
Simple. Effective. Murderous
I think folks who like ongoing low-grade chaos (or high-grade chaos, on the higher intensities) would find it fun as it will create pressure from any planet the AI can still reinforce (if the AI is normally reinforcing them). As a small benefit it also reduces the AI's defensive accumulation over time (because a certain % of those ships are just coming at you instead).
Edit: to clarify, this doesn't impact special forces. It would have, back when special forces guard posts actually got guards here, which then went onto the SF fleet, but I don't think they do that anymore.