In theory, it allows kids to memorize these words so that they recognize them instantly instead of wasting time sounding them out etc. In theory, this should improve comprehension and speed due to less distractions.
I'm still on the fence whether I think this is the best way to teach reading. My oldest did not learn reading via sight words - he learned phonics and traditional reading skills like context to understand what he was reading. He has the ability to read well above his grade level and excels in most classes.
My youngest has been taught using the sight words method and he struggles with reading. If he sees a word he doesn't recognize it frustrates him. My oldest just would have sounded it out; looked at the rest of the sentence for context and went on his merry way, whereas my youngest seems to feel that having to sound something out means he isn't doing something right.
Over the summer I plan to work more on some more advanced phonics with my younger son to see if it helps him enjoy reading more. Not all of us are big on memorizing words and do better with the mechanics of it; not shortcuts. Just my two cents :)