What exactly does this repository contain and why should a user either stay away from it, or add the repository?
N.N. is correct, but let me give you an example:
When a version of Ubuntu is released and is considered stable the stable release updates just don't get uploaded into the archive. So let's say a piece of software needs an update, after they go through the stable release update process they get uploaded to the "proposed" pocket. (Step 4 in the linked document):
Here's a list of what some of the updates look like. Then the people who have enabled the proposed section (including the person that uploaded it) test it, this usually takes about a week, sometimes less.
After that the update is pushed via the normal update channel and you get it via the update manager. Basically it's just a place to test updates before they hit the general public.
Essentially it's a testing ground for packages (and more commonly package versions) before they're released into the main repositories. So the normal update rules apply: unless strictly necessary, you'll only get serious bug fixes and security patches through this.
If you enable it you get things before they're fully tested. From my experience it's not as unstable as an alpha or beta version of Ubuntu but it could be. As such you should probably only be using it if you exist to give feedback on packages. You probably shouldn't use it on production machines.
tl;dr, Don't use it unless you have to.
According to the community documentation on repositories the proposed repository is:
According to the community documentation on backports the proposed repository is:
Also see this thread and its links.