Dead players can't communicate with alive players for obvious reasons, but in some situations like matches it's useful to communicate with your alive teammates, while being dead, and not everyone is able to use a mic and a program like TS3. This allows you to chat with your alive teammates, but to prevent people cheating, it only works if specmode isn't 1 - so when dead people aren't able to spectate everything.
To use it on the server, simply say '!team <msg here>', or if you want an easier way open the lua file and set 'teamchat_mode' to 2, which will allow you to use the 'sayteam' button, which is U on default, as well the say command '!team'