It wraps a '<div>' element around one or more blocks. That element is called a wrapper or a container. You can add an ID, various CSS classes, or custom attributes to the wrapper. It's especially useful for developers who want to apply styling to a group of blocks.
The problem with the setBlockWrapperStart is that *all* blocks get the same HTML structure. It's not easy to make an exception for one block without creating a new area.
The HTML-block *could* do the same, but it's a bit too simple. For example, it won't give a fixed height to the closing DIV in editing mode.
It's an option, but it kind of 'breaks' the idea of front-end editing. To edit the stack you have to go to the back-end. Also, because e.g. applying styles to a stack currently doens't work (tested in 8.4.0), the interface doesn't feel quite reliable.