More importantly, it allowed you to use some hardware that wasn't supported on Linux. I had a sound card that needed a DOS driver to provide Sound Blaster compatibility and this was the only way to use it from Linux.
How does it work? I wasn't using computer at that era but it sounds like start running Linux kernel from MS-DOS. Linux Kernel take the control and overwrite MD-DOS from the memory. So there will be no MS-DOS to operate the sound card.
Probably a "compatible" card that would behave like the standard of the era only after being setup by a DOS driver. Linux, like DOS programs, would find it only after such a setup. Perhaps even the card setup would not survive a reboot.