[1][2] It allows customized NAT traversal filters to be plugged into the gateway to support address and port translation for certain application layer "control/data" protocols such as FTP, BitTorrent, SIP, RTSP, file transfer in IM applications.
In order for these protocols to work through NAT or a firewall, either the application has to know about an address/port number combination that allows incoming packets, or the NAT has to monitor the control traffic and open up port mappings (firewall pinholes) dynamically as required.
Legitimate application data can thus be passed through the security checks of the firewall or NAT that would have otherwise restricted the traffic for not meeting its limited filter criteria.
Basically a NAT with a built-in ALG can rewrite information within the SIP messages and can hold address bindings until the session terminates.
It is common for SIP ALG on some equipment to interfere with other technologies that try to solve the same problem, and various providers recommend turning it off.