This is a rather weird-looking exercise, but it's a very effective way to build the whole deltoid with an emphasis on the lateral portion.
Basically, the movement is like performing a one-arm lateral raise while the other arm is brought up with the elbow bent at a 90 degree angle. The bent arm doesn't do much work because of the advantageous lever, but it allows you to keep some tension on the shoulder muscle during the whole exercise. Constant tension equals more growth!