This was originally from the Renoise forums which I have adapted for Audulus. It simulates the action of a mass spring and is useful at low rates for modulating things like pitch (e.g. for a fading vibrato). Putting audio through it makes a comb filter like effect to something that sound like you are putting something through a spring.
Its quite interesting and I suspect in the realm of recursive functions (or difference equations?) - I think similar techniques are used to make filters but I'm not sure, this area is currently beyond my understanding..
Anyway it makes for an interesting toy and sound effect.