You only need to change the LocoNet ID when there are several seperate LocoNets using radio in close proximity. At a train show with multiple LocoNet-based layouts using radio throttles, for example, they need to have different LocoNet IDs or their radios will interfere with each other. The LocoID tool (under the Digitrax menu) lets you read and change the ID.
Note that the ID is stored in the UR91 radio receivers, so if you don't have any of those, this tool won't be able to read or write values.
For more information on the UR91 and radio operation, see the corresponding Digitrax page.
See also page 98 of the Digitrax Super Chief manual(PDF).