That's pretty much it - it frees up space. Basically, you have 1 GB of internal memory. That 1 GB is partitioned so that you only have something like 430 MB on /data, which is your usable internal storage (for apps, etc.). You also have a /cache partition for...well...cache. For whatever reason, dalvik cache is stored on /data. Since this takes up a good 60 MB, you gain all that space back by moving dalvik to /cache. It's not using any less space internally, but it looks like it's freeing up a whole bunch of space, to you, since you can only use /data. Why they decided to put it there is beyond me. If you use a2sd, you also have the option of moving dalvik off internal memory, entirely, and moving it to the ext partition that you can create on your sdcard.
Otherwise, there is no other purpose to moving dalvik to /cache.