What exactly does git’s “rebase –preserve-merges” do (and why?)

Git’s documentation for the rebase command is quite brief:

--preserve-merges
    Instead of ignoring merges, try to recreate them.

This uses the --interactive machinery internally, but combining it
with the --interactive option explicitly is generally not a good idea
unless you know what you are doing (see BUGS below).

So what actually happens when you use --preserve-merges? How does it differ from the default behavior (without that flag)? What does it mean to “recreate” a merge, etc.