That file contains the information of all the packages in the repository like name, date and version. For example, if you were using the SD-Linux image you could use this other repository. The instructions for this repository are in here: Galileo Package Repo Configuration Instructions
You would need to write the URL in /etc/opkg/base-feeds.conf so when you run opkg update, the board will search this file and look for the URL and search the Packages.gz to check which packages have a newer, older or same version. I hope this answer your question.