This flag does not exist in GNU objcopy but has a major use case. Debugging tools support the .build-id directory structure to find debug binaries. There is no easy way to build this structure up however. One way to do it is by using llvm-readelf and some crazy shell magic. This implements the feature directly. It is most often the case that you'll want to strip a file and send the original to the .build-id directory but if you just want to send a file to the .build-id directory you can copy to /dev/null instead.
The .build-id use case documentation can be found here: https://sourceware.org/gdb/onlinedocs/gdb/Separate-Debug-Files.html
In Fuchsia we now have a lot of tools that fetch binaries based on their build id but we do it using this awful non-standard thing we call "ids.txt". This will let us replace it.