It will clear the caches of all your apps. It's the same data you can clear by tapping the Clear cache button on the App info page for each app in Application Manager, except this clears the cache for all apps at once.
Cached data generally consists of the app's frequently or recently accessed data, information about the app's current state, and login credentials. Pretty much the only irreplaceable data that's ever stored in a cache is search history and records of recently accessed items (though many apps store this kind of info in app data rather than the cache, and the cache is never used for logs or records that users are expected to want to keep, such as call history in the phone app).
Worried I'm gonna lose something I need.
Unless it's important to you not to lose search/view histories on apps where the developer didn't think they would be important to keep, no, you won't lose anything you need because all the data in the cache is easily replaceable. Some apps might run a little slower temporarily as they re-access data that was previously cached (and presumably, put it back in their cache), start on the default screen rather than the most recent one you were using, prompt you for credentials instead of logging in automatically (just the first time), and things of a similar nature.
Now, the question is whether you actually have a reason to do this. The two main reasons I can think of is if you're out of storage space and need to clear some quickly without uninstalling apps or sifting through your files to see what you can delete, or if your phone has been having strange inexplicable quirks that you suspect might be caused by some misbehaving apps.