Its purpose is to ensure that the business model and operations of the target are suitable to the goals of the buyer.
[1] The ODD review looks at the main operations of the target company and attempts to confirm (or not) that the business plan that has been provided is achievable with the existing operational facilities plus the capital expenditure that is outlined in the business plan.
Additionally the ODD review will consider whether there is the potential for additional value to be wrought out of the target company by improving its operational function and also whether there are serious operational risks about which the potential buyer should be concerned (thereby allowing the buyer to consider aborting the deal or renegotiating the price).
Often the ODD is requested by the bank or other financier that is supporting the acquisition and is interested in the downside risks.
ODD activities are often focused on analyzing the supply chain, engineering, and manufacturing operations of a target acquisition in detail.