The human ear hears different pitches at different apparent loudness levels.
Given a high pitched sound and a low pitched sound at identical volume levels, the high pitched sound will "sound" louder. This is most apparent at low volume levels.
So, when listening at low volume levels, the bass notes will appear less loud than they really are. So, the "Loudness" switch boosts the bass so that the music sounds closer to what it "actually" sounds like.
It really works, just like it's supposed to. There are certainly folks who will tell you that you shouldn't use it, because it "colors" the music. If you don't use it at low volumes, then the music will have significantly rolled off bass.
Whatever floats your boat. It's your house!:thmbsp: