I can't speak very technical on the subject , but in a nutshell...search engine spiders don't like very long dynamic urls like this for example;

So what mod_rewrite does is it

1.) Shortens the url
2.) Makes it "static" by adding a .html at the end of it

this way, spiders have a very easy time indexing your site. Which is a good thing!

I haven't mod_rewrit(ed) vbulletin, but I have phpbb and it was pretty simple.
So, vbulletin should be 10x more simpler. I hope that explains it, I'm sure some else could provide a more in depth explaination. But...I'm only Danny.Vbt.