A focus limiter simply restricts the range of distances the camera will attempt to focus at. This improves both the speed of focus and the accuracy (as it is assumed you are only interested in subjects within the range you have selected).
You tend to see them a lot on macro lenses, which can focus from a few centimeters up to infinity. Often a lot of travel in the focus mechanism is only covering the first few metres (you'll notice if you look at a lens with a distance scale that it is logarithmic). The limiter helps the lens behave as if it had a normal focus range when you're not shooting macro.
Most cameras when they can't lock on focus will have the lens search through the range of focus distances until some detail is detected, this is sometimes called "hunting". With a macro lens this can take a while. You also get limiters on telephoto lenses as most of the time you're using a telephoto because you're shooting something far away so can safely ignore the closer range. It can improve accuracy by preventing focus from accidentally locking on to foreground objects.
You select the modes via a switch on the side of the lens. The limiting is implemented in the communication between the lens and camera, it is not a mechanical limiter so it doesn't affect manual focus.