pulsecms.com/blog.php (Main page)
pulsecms.com/blog.php?d=7 (Post)
With rewriting turned on, they will look like this:
pulsecms.com/blog/
pulsecms.com/blog/7
As you can see, the "?d=" and ".php" have been removed and it looks much nicer. Search engines also prefer URL's that do not have parameters(?d=) in them, so it is also benficial in terms of SEO.
By default this option is turned off. To enable it, go to the settings page and turn it on, then place the provided .htaccess file in the root of your domain.
The only requirement for using the new rewritten URL's is that your blog url must be in the domain root. For example, example.com/blog.php.
To see the new URL format in action, check out the Pulse Blog itself.
UPDATE:
I have made some slight modifications to the rewrites and they new include the blog title for better SEO

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