I was clued into this when running a woorank report on my website, and it didn't recognize our blog (even though we had an RSS feed at /blog). Adding this bit gave us the "green light", and also showed an RSS icon in Firefox and Safari.
I think this might also allow someone to type in your base URL into Google Reader, and it will pick it up.
I think this might also allow someone to type in your base URL into Google Reader, and it will pick it up.