Audio Devices: Hardware Rate Converter
Apple has documentation for this in Mountain Lion.


  If your computer contains support for the hardware sample rate converter, the Hardware Rate Converter pop-up menu is available in the Input menu. When you choose Automatic from the pop-up menu, the hardware sample rate converter is turned on if the audio samples coming in are PCM and formatted according to the international standard IEC 60958-3. The hardware sample rate converter is turned off if the input stream is encoded. You can also choose Enable or Disable from the menu to keep the hardware sample rate converter turned on or off.


So this would only be useful if you have something like a S/PDIF input and wanted the audio converted to a different digital rate.  I don't have any specs on it, but I would expect the hardware rate converter to have very low latency compared to software rate conversion.