Basically, it tracks experts and makes decisions on investments given what the experts say. Think about how many times you've seen someone say: "I work at Google, our cloud is doing X" or something like that.
The fact insiders talk, let me track them and make money.
Unfortunately, that doesn't mean I'll make money tomorrow. The market is always correcting.
A single piece of non-public information that would move the market. Trading on that information is insider trading. Think "we have undisclosed losses equal to 5 times annual earnings" that your brother told you at a bbq. That is insider trading.
Inferring the existence of some information based on many other pieces of information isn't just legal, it is encouraged. "These guys must have some big undisclosed losses, remember how Mary used to talk about engineering projects and how she talks at BBQs now? Bob was saying his HR dept. is insanely busy. Ahmed resigned and took a job that looks like a step down for him. Ok I'm a sell on this." That is equity research and to be encouraged.