Iwspy is used to set a list of addresses to monitor in a wireless network interface and to read back quality of link information for each of those. This information is the same as the one available in /proc/net/wireless : quality of the link, signal strength and noise level.This information is updated each time a new packet is received, so each address of the list adds some overhead in the driver.
Note that this functionality works only for nodes part of the current wireless cell, you can not monitor Access Points you are not associated with (you can use Scanning for that) and nodes in other cells. In Managed mode, in most case packets are relayed by the Access Point, in this case you will get the signal strength of the Access Point. For those reasons this functionality is mostly useful in Ad-Hoc and Master mode.