Rubber Band mode provides a way to proportion the arm and leg links simultaneously, by moving the link with the Move transform, instead of using scale. Rubber Band mode scales both the link and it's child in a single step.
This is particularly useful when fitting a biped to a skin prior to applying the Physique modifier. For example, rubber-banding the upper arm rescales the upper and lower arm objects and moves the elbow link without affecting the position of the shoulder or the wrist. If you've spent a lot of time getting the fingers in the right place you can reposition the elbow by rubber-banding, without affecting the hands.