It is primarily designed to relay a spacecraft's "health" information, and secondarily its telecommunications status, using a simple signal that can be detected with a moderately-sized antenna.
Addressing multiple spacecraft is accomplished by using four unique CW frequencies with 16 possible tones, used somewhat like DTMF signaling technology.
In the outer solar system, UHF frequencies are not used; instead, the primary (or backup) transmitter is programmed to transmit the required tone (generally in the X or Ku band).
The beacon mode service is a new technological solution to the old problem of having to set up an active 2-way communication path with spacecraft beyond Earth orbit and more than 30 light-minutes away.
It originated during the 1990s, when spacecraft transmitters became complex enough to support the service, and deep-space missions became too numerous for each to receive daily communications.