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Creating and saving Custom Views, allows your end user the ability to interact with a Dashboard (apply filters etc) and save the view at that position. Then next time they come back to the dashboard, this view that they have saved can be accessed (so that they dont have to remember and apply the same filters again and again...)
This view can also be made their default view for the dashboard (so that when they return to the dashboard, the filters that they want applying have already been applied)
Additionally, they can also be permissioned so that they can share the view they created with other people who can also access that dashboard. (This is the share custom view permission)
Removing this permission will still allow end users to create their own custom views, but not the ability to share it with others.
Hope this makes sense to you