Its a very expensive bit of paper which is an excuse for FTOs in the UK to print some extra cash.
In FAA land this is called an "Endorsement". When the instructor reckons you're at the required standard, he signs your logbook to say so. In JAA land, you are required to do a mock test, called a 170A, at a cost of probably £500 for the pleasure. Then more than half JAA IR applicants fail first time anyway, so its all a big con.