Microsoft Knowledge Base Article 307853 contains the following summary:
This article describes how to use the Offline Files feature in Microsoft Windows XP.
You can make network files available offline by storing shared files on your computer so that they are accessible when you are not connected to the network. If you do this, you can work with the files the same way that you work with them when you are connected to the network. When you reconnect to the network, changes that you made to the files are updated to the network.