I just acquired it and used 3 dragon souls to unlock it but haven't a clue to what it does. The description reads, "The Thu'um is heard but its source unknown, fooling those into seeking it out."

When I use it, all it seems to do is taunt me. Am I missing something here or is that all it really does?

It makes a voice speak wherever you are looking, luring enemies away. It's really only good for stealth characters.

Go sneak somewhere. When you find an enemy you want to distract, then use the Shout facing the direction you want the enemy to look or move to. Then it will either look over there for a bit giving you time to move past, or it should move over there to investigate. I don't know about the last one as I only have one level of this unlocked.

BTW, I do the same thing with an arrow. I shoot it at a place behind and enemy and they turn around and go investigate where the arrow landed.

Hmm... odd because when I used it repeatedly, I got attacked by 3 ice wraiths at once lol xD

Hey, gourd nose!
I love it, but I wish they recorded more taunts.

Makes sense, you alert them the first time you use it, then the second time you use it, they are now looking for you, they find you.

Also, this does not replace Sneaking, all it does is distract enemies that are not already focused on you. If they are focused on you, it is too late to use this shout.

he also says something like "Hey Skeever Tail"