This entity lets you place special textures in your map, on top of solid brushes. Things like scorch marks, cracks, oil, lettering, etc. can be applied. The Decal Tool in Hammer is an easier way to apply them.
*Unlike its counterpart in Half-Life, the decal determine its rotation based on the YAW rotation of the entity, which means that the representation inside J.A.C.K. is not accurate.