This does two things that may be important: it allows the non-annually resolved proxies to be used (recent previous reconstructions,
e.g. MBH98,
Esper et al., used only those with at least a value each year, to allow calibration against the instrumental record; Moberg's approach allows the use of data that only provide 50 y means); and it throws away the long - term signal from the tree rings, which they consider to be untrustworthy.
[Response: It's probably worth adding that Jim's last conclusion is not universally shared (
e.g. fig 3 from
Esper et al, 2012 shows a very good correspondence between TRW and MXD chronologies).