Yeah it deals with orientation latency.
From the Oculus dev blog on ATW :
On Oculus, ATW is always running and it provides insurance against unpredictable application and multitasking operating system behavior. ATW can smooth over jerky rendering glitches like a suspension system in a car can smooth over the bumps. With ATW, we schedule timewarp at a fixed time relative to the frame, so we deliver a fixed, low orientation latency regardless of application performance.
This consistently low orientation latency allows apps to render efficiently by supporting full parallelism between CPU and GPU. Using the PC resources as efficiently as possible, makes it easier for applications to maintain 90fps. Apps that need more time to render will have higher positional latency compared to more efficient programs, but in all cases orientation latency is kept low.
However, ATW is not a silver bullet. Failing to maintain a consistent, full frame rate may produce visible artifacts including noticeable positional judder, particularly in the near field of view. An application that falls below 90fps rendering will get re-warped in time to avoid rotational judder, but while orientation latency is kept low and smooth, animation and player movement may judder in lock-step with missed frames. For these reasons we continue to recommend that developers do not rely on ATW to save them from low frame rate.