The following description is adapted from the creators site (lightly edited – I can’t help it!):
With this plugin, you can safely change your permalink structure without breaking the old links to your website, and it won’t affect your search engine rankings.
Many people want to improve their permalink structure by changing them into “pretty” permalinks, like /%year%/%monthnum%/%day%/%postname%/ to /%category%/%postname%/
But doing so will make all pages indexed by search engines become invalid. This may cause you to lose visitors from other sites or bookmarks that link to you.
This plugin uses a 301 redirect which sends visitors or spiders at your old links to the new ones. What I wonder is if this could be used for bloggers that are moving their blogs from Blogger to WordPress, for example.
