There is a small value capacitor that is connected to the input and output of your volume control when the high pass filter is engaged. When the volume is full on (10) the capacitor does nothing. Normally, when you roll the volume down some of your guitar signal is connected to ground (deadened) instead of your amp (less signal = less output = less volume). Low frequencies in your signal are easier to maintain at low volume levels while the high frequencies in your signal are the first to suffer when volume is decreased. The high pass capacitor allows an amount of high frequency to skip over the volume pot entirely and go straight to the output/amp. Most players find that this makes their guitars sound more clear and loud at lower volumes. Some find that it makes the signal feel/sound unbalanced and unnatural.
A cool alternative to the highpass filter is to implement the Gibson 50s wiring scheme. This wiring allows more of your guitar signal through the volume control as well but doens't create the imbalance of high/low described above. There is a thread about the 50s wiring in the forum
here.
