Ok, and so what does it do? If the engine fails and you're VNAV'ing, it accelerates at the lower alt on its own?

FCTM says this:

On airplanes with FMC U10.7 and earlier, at engine out acceleration height, selectflaps up maneuver speed on the MCP. Engine-out acceleration and climbcapability for flap retraction are functions of airplane thrust to weight ratio. Theflight director commands a near level or a slight climb (0-200 fpm) flap retractionsegment. Accelerate and retract flaps on the takeoff flap retraction speed schedule.On airplanes with FMC U10.8 and later, at engine out acceleration height, ifVNAV is engaged, a near-level climb segment is commanded for acceleration.Retract flaps on the takeoff flap retraction speed schedule.On airplanes with FMC U10.8 and later, If VNAV is not engaged, leave the pitchmode in TO/GA and select flaps up maneuver speed on the MCP. Engine-outacceleration and climb capability for flap retraction are functions of airplane thrustto weight ratio. The flight director commands a near level or a slight climb (0-200fpm) flap retraction segment. Accelerate and retract flaps on the takeoff flapretraction speed schedule.