It allows you to reserve breedings, whether that horse is retired or active, or you sell the horse. So to DNA Breed you have to add one item to one horse, and another DNA Breed item to another horse--which then gives you 5 breedings.
When making supers, I know I'm personally picky about which horse to choose. It has to have great DNA and be all tens, then I'll add a LH, luck charm, saddlebag, 5 saddles, and then (usually) one or two DNA items that the horse isn't born with. Ideally, I'd love to get a horse that I don't have to add DNA to (or that I can add SH DNA because it doesn't count towards the items added), and then maybe add a leg wrap and a dog.