does it make it so that candles cant flicker?...what does it actually control?
Fiddling around with the fFlickeringLightDistance setting changes the distance when you see this: http://www.youtube.com/watch?v=aLLvF6t52lM&feature=youtu.be
Default value is 1024. You have to add the setting in Skyrim.ini under the [General] section.
Having a higher fFlickeringLightDistance (for instance 4096 and higher), it means that this light flicker distance is much longer, so you won't see it pop-up close to you. This also causes lights to be darker though, because there is never a light flicker change. No performance hit. That's 2 positives and 1 negative. It will be possible to make lights stronger by tweaking HDR settings though once the CK comes out.
Having a very low fFlickeringLightDistance (for instance 2), it means that this light flicker distance is much shorter, so you'll never see a pop-up at all. This also causes lights to be brighter (which looks nicer), because the light flicker has never changed to the darker version of it, because the distance is so short. However, since this makes the light flicker distance so short you'll never notice it, this also removes the light flicker from light sources in terms how they affect other objects (like how the light of a fireplace flickers on other nearby objects). No performance hit from what I could tell. 3 positives and 1 negative.
Pick a choice which path you want to go. There are different positives and negatives of each one. I'm personally choosing the path of the higher fFlickeringLightDistance.

One thing is for sure though, having the default number of fFlickeringLightDistance is a bad idea, unless you like constant light pop-ups 10 meters ahead of you.