In the Terra Mystica iOS app, what is the "map balanced VP" option?
There's some information from one of the game designers on BoardGameGeek; they feel that some of the factions are slightly better or worse than others, and this is an attempt to tweak them a bit to get them more into balance, without making any more drastic rules changes.

As for "what it does", it adjusts the starting VP for each faction, so that they get different VPs depending on the map (normally a faction starts with 20).  I'm assuming that it will not have any effect (for now) on Loon Lakes, but might do so once more stats are available.