Alan, it improves DMax by extending dynamic range in the same way HDR photography of a DSLR does it.
With M-E the scanner takes two scans of the same image, each at different exposure, later both images are combined.
the longer exposure image (probably) has the highlights blown but the shadows have better detail, so this image provides the detail for the shadows.
Multi-Exposure solves shorcomming in the electronics capability, when making the Analog to Digital conversion (this is taking the voltage accumulated in each pixel and converting it to a digital value) it is difficult to have top precission and top speed at the same time. Multi-Exposure solves that, allowing to get an optimal result close to what is possible in that scanner.
Probably some Pro scanners can take both shots for a row (the short and the long exposure) before advancing the carriage, in the Epson case it is necessary to make to passes to get two scans which is not as nice, but still M-E provides a powerful enhacement for deep Velvia shadows, DMax is increased and noise in the very dense areas is decreased impressively, many times avoiding to need for a drum scan or flextight.
The Epson V850 preforms impressively well with very dense Velvia, at least in (say) 95% of the times we don't need more, but there can be situations in what we may require a drum job to recover better ultra dark slides, mostly coming from a quite flawed exposure in the taking.