this is turning off the watchdogs. the phone has timers to detect if the phone hangs/crashed/is bricked and do a reset if this is the case. you usually have to send them a signal every once in a while to show them that everything is still ok. if you don't the phone reboots. usually the bootmanager starts them and that line prevents the bootloader from starting them.
its basicly saying: "watchdogs stay away!"

there is whatchdogsupport in the mainstream kernel so you don't neccesarily need that but in that case you have to take care that they are configured,. actually i have them running for i want the thing to restart if something goes wrong. this is the emergency break i want to have.

and yes if you do something with the flasher you have to put it on the usb: sure.