This allows mods to edit profiles of users. However, as of XF 1.5, it is now bound to the profile permissions of the target user. IE: The permissions on one user account affect moderator permissions on another account. I setup a ban system where members are temporarily added to a "Banned Users" group, that restricts their permissions (can view forum, can't post, make reports, edit their profile, etc.) In the past, we have had members put inflammatory/rule breaking content in their profile. A mod would temp ban them and then edit out the info.
As of 1.5, once a user is added to that Banned Users group, mods can no longer edit the profiles either. I verified this through a test account where, just on that account, I specifically started applying "Never" to various profile editing permissions, and my mod reported that it would disappear from their options as well. This makes absolutely no sense why permissions restrictions on one user would affect a different user.
@Xon dug up the problem, in XenForo_ControllerPublic_Member::actionEdit
$user['permissions'] = XenForo_Permission::unserializePermissions($user['global_permission_cache']); $userCanSetCustomTitle = XenForo_Permission::hasPermission($user['permissions'], 'general', 'editCustomTitle'); $userCanEditProfile = XenForo_Permission::hasPermission($user['permissions'], 'general', 'editProfile'); $userCanEditSignature = ( XenForo_Permission::hasPermission($user['permissions'], 'general', 'editSignature') && XenForo_Permission::hasPermission($user['permissions'], 'signature', 'maxLines') != 0 );
EDIT: This has apparently been broken since XF 1.3