He gives the example of a menu item that lists every file in a directory. As files are added and deleted, the menu adjusts to the directory's new contents. The menu is recalculated only when it is activated so there's no need for it to track the directory in real time.
It's easy to imagine all sorts of situations in which having such a menu might be useful. For example, I could have a menu that let me choose a post from my post queue to publish to Irreal. Kitchin's code is just the latest of the many interesting things he's contributed to the Emacs community lately. It's worthwhile subscribing to his blog to keep up with his output.
Update: Kitchen → Kitchin