It does what it says in the name. It's effectively like a virtual machine that only affects Facebook. It loads anything related to Facebook into the container, like comments and like buttons on external sites. Of course, it's not perfect, and Facebook *could* still track you in some ways, but that's why you should use this in combination with Tracking Protection, and other add-ons like Privacy Badger.
Only reason I'd recommend against this add-on is if you absolutely have to use Facebook login on some sites, as that likely won't work. I'd advise just switching to a password login if possible.