It controls the number of polygons on your garment mesh. The lower the value of the particle distance, the higher the number of polygons, thus the smoother your garment will be and you'll be able to see more wrinkles of your cloth.
But the higher the number of polygons, the slower your computer performance will be. Use it carefully.
When to use it?
Usually if you have a very small piece of garment or on fold, and it becomes jittering or clipping, due to the lack of polygons.