According to the docs:
Prevents SQL Server from automatically starting and recovering any database except the master database. If activities that require TempDB are initiated, then model is recovered and TempDB is created. Other databases will be started and recovered when accessed. Some features, such as snapshot isolation and read committed snapshot, might not work. Use for Move System Databases and Move User Databases.
Note: Do not use during normal operation.
Scope: global only
But it turns out it can do quite a bit of harm. It seems that many things stop working when it’s in use, though, including statistics getting automatically created.
Click through to see what kinds of things fail to work as a result of this trace flag.