It removes the content from modules, mainly so that you can get the page to show up even if a module has an error in it.  This was brought back from the DNN 2 days.

Why it is called "Design" and put under page functions, I do not know since it is applied globally to every page you visit when it is on. Possibly because a designer can see what their page looks like without content in the modules, but if they want to do that then they are asking for trouble as soon as they allow content to be added.

I think it would be more useful to have it be a mode that you can get to from the manage pages page.  
Click on a page in the list, then have another icon added where the edit and view icons are now. Then have it pop up a new window without content in the modules like the skin preview does.

The manage pages page would also be a lot better if you could click on a page, and have it populate another list with all the modules for that page, in turn allowing access to all the actions that can be performed on a module.

ok

Preview is gone..   to a different type

Design is in its place.

Confusing if you are an end-user....