What is the purpose of a smog block-off plate?

The block off plate replaces the plate which allows an air pump to pump air into the system to allow for better burn of the exhaust gasses (any fuel which may not have been burnt during the combustion process).

Here is what the Graves Motorsports web page has to say about it:

The air induction system (AIS) burns unburned exhaust gases by injecting fresh air (secondary air) into the exhaust port, reducing the emission of hydrocarbons.

Once these are capped off the air injection system can be safely removed. These Smog Block Off Plates are made from CNC'ed billet aluminum and feature the Graves Motorsports "G" logo. There are three reasons why you want to remove the air injection system from your bike;

1. If you are using your motorcycle on a closed course (racing, track days, etc.) you will want to remove all unnecessary equipment from your bike for reduced weight and ease of maintenance.
2. To get an accurate Air:Fuel (A/F) ratio when dynoing the bike. The air injection system pumps fresh air directly into the exhaust stream in order to burn off any unused fuel. Unfortunately by doing this the A/F ratio is thrown off by the extra "fresh air" in the exhaust stream. By removing the air injection system you can achieve an accurate A/F ratio.
3. This addition will typically remove the majority of popping on deceleration that can be experienced with un-burnt gasses within the emission charcoal chamber. Note: Proper tuning may be needed and this is general feedback.

As far as installation goes, it seems pretty straight forward. Here is a video of how to get to the plates. There are several videos which cover the installation. This one does not go through the installation per se, but does show you where they are at and how to get to them (I think they didn't finish the entire video). Basically, the install calls for removing the seat, the side panels, propping up the gas tank, taking the velocity stacks off, taking off a heat shield, taking the air injection plates off, taking the air injection system out, replacing the air injection plates with the new plates, then reinstalling everything.

According to what I could find, (besides what is already detailed above) one of the main reasons for installing these is to reduce popping during deceleration. Obviously, if you are removing them, the down side will be the possibility of greater emissions at the tail pipe.