What does "toggle command range" do?

You have the leadership mod installed.

Basically, once you have the Guerrilla Tactics School constructed, you'll be able to upgrade it at further cost and Energy usage. You'll then have a slot where you can put one soldier at a time to train them in Leadership abilities. Much like regular class abilities, you get to choose between two each level. Note that you only gain leadership ranks for kills, not for completing missions, so your leader is going to have to get some wetwork done instead of just hanging back and letting everyone else have the fun. Also, you can only bring one soldier with leadership training in any given squad.

Around half of the leadership abilities mention a "Command Range" - an area around your leader where any of your other soldiers get the bonuses that ability mentions. The toggle you're seeing creates and disables a visual for that range - a transparent green wall around your leader.

If you don't have any soldiers trained in leadership, the button does nothing, because there is no one giving off the Command Range aura.