This USB emulation is the same as mode 0, with a game controller, mouse, and keyboard interface, with the exception of removing the SCSI Flash drive interface.
It can be useful for situations where the presence of a flash drive can be a problem. An example would be when connecting to an Android device. The Quadsitck flash drive is not compatible with Android. Sometimes Android devices will keep prompting the user to "repair" the flash drive and this can lead to problems with the quadstick, forcing the user to format the flash and reload all of their configuration files.
Another example would be with Mac computers which will complain when a quadstick is unplugged without "ejecting" the flash drive first.