This explains it:
http://www.cic.gc.ca/english/department/media/backgrounders/2012/2012-10-26a.asp
Basically, the intent is to prevent couples from pretending to have a real relationship (or marriage) until they acquire permanent residency, and then splitting up shortly thereafter. In some cases, couples agree to fake their relationship so one of them acquire permanent residency in Canada. In other cases, the applicant pretends to love the sponsor but then hits the road after they get permanent residency. These are forms of immigration fraud. Conditional permanent residency is designed to prevent this, or at least make it much harder to accomplish.
The condition means that the sponsor and the permanent resident must continue to live together in a legitimate relationship for two years from the date that permanent residency is established. If they split up, the permanent resident could have their status revoked. So it makes fraud harder to accomplish.
There are two major exceptions to the condition: if the sponsor dies, or there is evidence that the sponsor abused or neglected the permanent resident, the condition can be waived. Again, the intent of the condition is to make fraud harder to accomplish.
For applicants and sponsors in a legitimate relationship, the condition is usually no big deal. We don't plan to break up within two years, so meeting the condition is easy.