This button changes the display of distinguished names in the attribute list. When the button is pressed, the objects can be shown in a friendly way which is more readable for humans than the technical, X.500-derived LDAP distinguished name.
In attribute lists, LEX have to show the attribute values, therefore it's a bit dangerous to change the display of distinguished name attributes because the user could overlook this conversion. To avoid misunderstandings regarding the real attribute value, you have to explicitly configure the attributes for which you want to see friendly name outputs in the attribute list. This is done with the menu option Tools - Options - LDAP Settings - Distinguished Name with RDN Output:
There is no distinguished name attribute for which the friendly name output is activated by default.
Maybe a good candidate for this would be the member and the memberOf attributes, this could make the group membership display more clearly. Here the result of setting the attribute "member" to be displayed with short RDN output in attribute lists:
The Show friendly object names button is not available if the attribute window is in text output mode.