My understanding is the step causes aeration under the hull, reducing friction and encouraging the hull to plane earlier, with the trade-off being reduced stability when cornering (in a powerboat application anyway.. how it relates to a dinghy which has a tendancy to heel in a straight line i don't know).
How does this fit with the rule stating that "chines shall be fair and continuous curves"? From top-down this could be true, but in side profile they certainly wouldnt be.