It is a useful thing to do. When doing so it will highlight pretty much all entities. In this case, if you threw an item on the ground, the hitboxes would show up. The red boxes show the hitbox. The blue lines show the direction where the entity is facing. Quite useful in PvP. I never use it though, I keep forgetting. It works on players too.
The blue line is their line of sight. The red box is their top and the white is their hitbox. It's quite a useful feature
This actually helped me in an oitc fight. A person was aiming their bow around the corner, while crouched so I could not see them, but I could see their blue line of sight going around the corner, so I was able to know a person was there.
I already knew some of this stuff. F3 + H shows all of the item's ID numbers F3 + B shows hitboxes and line of sight F3 + A refreshes chunks That's all I know off the top of my head