The watchdog aggregator is intended for people that run some or a lot of drupal sites and may have a central site (maybe an intranet site) that they can visit and see if something is wrong on their other sites.
It collects all watchdog messages of a certain level (f.e. WATCHDOG_ERROR and above) from other sites similar to the news aggregator module that collects news.
The module works by using direct database access via mysql or postgres. It provides a block similar to the news feed aggregator block and a section under admin/reports were you can see and filter the log messages by site, type and error level.
For graphing statistical data the module depends on Flot.