Basically it says the RIAA and other such companies can't hold the makers of the software responsible for people who use their software for illegal purposes because the software has legal uses.
People can also commit copyright infringement using cd burners, vcr, tape recorders, and any other device that can copy and store data. But those won't be made illegal because they have a legitimate use as well. Hell they once tried suing Sony for making VCR's, that didn't fly far.
And they really don't have to chase down everybody that's filesharing copywritten materials. If they just go after 5-10% of those people it's going to hurt alot of people.
IMHO I think it would make for good
PR for certain famous recording artists to actually promote filesharing of their songs and say they won't prosecute people for sharing their music/intellectual property.
That way the artist would actually gain popularity and hers or his music sales would go up.