Well what it does is that it disables plugins with a longer latency.
Remember that simply clicking on the on/off in an insert slot only bypass the plugin, if the plugin has lets say 100ms of latency, and you click on the off button in an insert slot it still has 100ms latency. If you want to turn the plugin of and regain that 100ms latency you would have to press ALT and click the on/off button. Or open the plugin and from the plugins GUI click on the off button to turn it off.
I think you have a plugin somewhere that is bypassed and not turned off, a look ahead limiter would be my first guess as they can produce a lot of latency.