A play loop is a region of material that repeats itself within the section for as many times as you specify. The Create Play Loop command creates a play loop out of the currently selected material. If nothing is selected, then the measure containing the playback wiper becomes the source measure for the loop. For your convenience, FreeStyle automatically figures out how many repeats are necessary to make the loop play for the entire length of the section.
The benefit of creating a play loop instead of just copying and pasting by hand is that if you make a change to the original material, the change is automatically reflected in all iterations of the loop. You can even make modifications to iterations within a play loop (called overrides) so that the loop doesn’t sound exactly the same each time it repeats.