It does all sorts of amazing syntax coloring for you, right on your consoles. It basically makes all the diff outputs from hg colorized, and also modifies the status and qseries commands output to print the patch names in color based on their status. And enabling it is as easy as putting the following two lines in your ~/.hgrc. Of course, you can go all crazy and customize it all, but I find the default choice of colors mostly good (except for underlining stuff which makes them harder to read in my opinion.)
[extensions] color =
Yes, it doesn't simplify your workflow, and it doesn't really do anything cool, SCM-wise, but trust me, once you enable it and get used to it, you can never go back to the usual dull hg output on your console.