This single feature is one of the main reasons I wear a digital watch. I have worn one every day since 5th grade, and have always made sure this feature was turned on.
Very simply, the hourly chime emits a chime on the hour. That is, every time the minute and second counters equal zero, and hour has passed, and a short beep is emitted (of course, the sound is different on each watch that allows for hourly chimes).
The option is on the surface fairly useless, but in a busy environment, it allows you to keep a loose grasp on the passing of time without appearing fidgety. Also, I have heard the sound go nearly every single hour for years, and it has become comforting to me. This may sound a bit odd, but it is reassuring to hear the consistent beep.