I think the intention of this functionality was to provide a simple
alternative to the "runAsRoot" and "contents" attributes.
The implementation caused very slow builds of Docker images. Almost all
of the build time was spent in IO for tar, due to tarballs being
created, immediately extracted, then recreated. I had 30 minute builds
on some of my images which are now down to less than 2 minutes. A couple
of other users on #nix IRC have observed similar improvements.
The implementation also mutated the produced Docker layers without
changing their hashes. Using non-empty tarballs would produce images
which got cached incorrectly in Docker.
I have a commit which just fixes the performance problem but I opted to
completely remove the tarball feature after I found out that it didn't
correctly implement the Docker Image Specification due to the broken
hashing.