It places a debuff on the enemy that makes them do 80% of normal damage. Kind of like the old siege weapon buff/debuffs. As far as I am aware, it stacks with taunt, challenge & guard. Could be wrong though.
Guard + Taunt + Dragon's Talon + Intimidating Blow = Neutered Enemy DPS Player
It's worth keeping in mind that DT and IB have very short durations. The SM has to be on the enemy constantly to keep it up, and it prohibits the SM from doing anything other than Ensorcelled Blow (or Protection of Hoeth) > Intimidating Blow > Dragon's Talon, which shuts down the SMs biggest mitigation ability, Eagles Flight, which is 25% parry. You can get away with using Sudden Shift to skip a normal balance GCD every few seconds, though.