In bypass mode it is just a speaker switch box paralleling the connected speakers.
In 'in' mode the speakers have series resistor added (which is not a good idea for hifi) and is there to protect the amplifier from seeing a too-low impedance on its output.
The max. output power is then limited because of the power rating of the used transistors.
It could also be that a PTC is used in series which, when heated by too much power, becomes higher resistant. A bad idea to use that (if it is used in the first place, I don't know) for serious hifi.
When you have 4x 8ohm speakers I would use it in bypass mode and use an amp that can handle 4ohm loads.
When you have 8x 8ohm speakers I would use it in bypass mode and use an amp that can handle 2ohm loads instead of using the 'in' mode.
Or use it as a switch so only pair 1 or max 2 pair playing.
I do not recommend (for serious listening) to use the 'in' mode in any case.
Fine for having some 'music' in up to 6 different rooms but not for any serious listening, just for some low level background music.
There is no impedance 'matching' going on at all though nor is that desirable in speakers in any way either.
In the 'in' mode it just ensures the load to the amp does not become too low in impedance. Amp load protection thus.