Red shirting allows you to designate a player who will not take a single snap all season, and so he sits out all year, but then reclaims that year and it doesn't count against them. So, you get 5 years of development out of a player instead of just 4, and he would have been sitting anyway.
For instance, last season, I had a ~70s freshman MLB who was not going to play at all because I had an 80s SR ahead of him. So I redshirted him. He sat out the whole year, but didn't lose a year of eligibility, so this year, he's an 82 ovr freshman linebacker, which is pretty sweet. He'll PROBABLY max out at a 95 - 99 in his career.