To understand why it matters, you need to know what a DAC is. Well, it stands for digital-to-analogue converter and a DAC's job is to take the digital ones and zeroes on your SD card and turn them into the analogue signal your headphones need to sing.
The LG G5 (and every other smartphone) already has a built-in DAC, but the Hi-Fi Plus module overrides it. There are a few reasons why you might want it to do that.