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I don't think it's very complex at all. You're just closing the outside sounds and hearing what comes back into your skull.

It's really useful in an ensemble, because the one bell that's always pointing away is your own, and you're going to hear some other players better than you hear yourself. Close your ear, and you won't hear them as much.

Exactly what Leland said. I do this sometimes in my Chamber Choir at school. We are singing Morten Laurdisen's O Magnum Mysterium (i definitely recommend the band arrangement) and I need to sing a D below the staff one line and it helps me get it in tune.