What it does is use diode clamps to eliminate over and undershoot. The "trick" is that instead of clamping to +5 and GND they clamp to the output of two regulated voltages. This allows the clamping diodes to turn on earlier and is therefore better at eliminating overshoot and undershoot. 
1) This text is not part of my submission, only the figure itself is. Rewrite your own summary.

2) This figure is significantly simplified to show explain the general principle and is not a complete working circuit. (too many diodes otherwise)
Own work
Jmonti824