In general, most MIDI editing will be done with the mouse in object mode. This allows selecting notes, copying, moving or deleting them and altering their properties (see below). Adding notes to a MIDI region using the mouse requires dragging with the mouse if they are to be anything other than a fixed length. Since this would normally be a selection operation if the mouse is in object mode, there needs to be some way to tell Ardour to draw new notes within a MIDI region. Ardour provides two ways do this: one is to leave the mouse in object mode and Left-drag; the other, useful if entering a lot of notes for a while, is to switch the mouse into Draw Notes mode, which will now interpret any drags and clicks as requests to add a new note. For obvious reasons, Draw Notes mode cannot be used while using region-level editing.
So, to summarize:
It is also a a step entry editor allowing entry of notes from a virtual keyboard, and lots more besides.