It doesn't make the QB throw the ball better. It makes the QB more likely to throw a long pass as opposed to a short one. Specifically, it reduces the "risk factor" the QB sees for his target if that target is 10+ yards downfield. The risk factor takes into account all sorts of things, including how open the WR is, the skill of the WR vs the dot(s) covering him, whether the WR is past the first down marker (if it's 3rd or 4th down), whether the WR has met the distance of the play (short, medium, long), etc. If the QB is looking at a receiver and the risk factor is low enough, he will throw the pass. If he has Favor Long checked and the WR is more than 10 yards downfield, the risk factor is lowered. I am not sure though with the setting if the opposite is true--i.e. if the WR is less than 10 yards, is the risk factor increased? I suspect that it is.
The biggest thing it does, is the qb hold the ball way way to long when set to far to favor long passes. It is the worst setting in the game IMO, avoid it like the plague