As @Raphael at Digital Pianism mention, It helps to increase customer security(Password security), you can check below code what Magento actually does when you run this command,
$this->collection = $this->customerCollectionFactory->create();
$this->collection->addAttributeToSelect('*');
$customerCollection = $this->collection->getItems();
/** @var $customer Customer */
foreach ($customerCollection as $customer) {
$customer->load($customer->getId());
if (!$this->encryptor->validateHashVersion($customer->getPasswordHash())) {
list($hash, $salt, $version) = explode(Encryptor::DELIMITER, $customer->getPasswordHash(), 3);
$version .= Encryptor::DELIMITER . Encryptor::HASH_VERSION_LATEST;
$customer->setPasswordHash($this->encryptor->getHash($hash, $salt, $version));
$customer->save();
$output->write(".");
}
}
$output->writeln(".");
$output->writeln("<info>Finished</info>");
You can check from this file
vendor\magento\module-customer\Console\Command\UpgradeHashAlgorithmCommand.php