The idea is a good one, although in practice it is probablly somewhat less than effective.
I haven't looked at it in a while, but I remember that it was a searchable, and contactable database. Essentially if somebody found a Leica, or saw one that was being sold under questionable circumstances, Leica could be the intermediary to get the camera back to its owner.
It costs them very little to maintain, and is a good resource, even if it doesn't work all the time, I applaud them.
I also think there may be some communication between the lost database and dealers around the world.