The first time, it allows you to put your clan tag on your weapon. The second time, it allows you to put your emblem on your gun. You can only do it twice. --- Red wine with fish. Well that should have told me something.
It resets the weapon back to level 1 (so it re-locks all attachments you have unlocked).
It also enables you to earn that XP again (to help you level up) and you can add your Clan tag to the gun after you prestige it once, and your emblem to it when you prestige it the 2nd time. --- GG TREYARCH! http://www.youtube.com/watch?v=QPfj-JvI0XI