It suppresses undead dormies from being chosen to be housed in your dorm. Frankly it detracts from the atmosphere and they DIE VERY RAPIDLY due to being unable to address their needs in a timely manner, either because zombies move at half a furlong per fortnight, or because vampires run out into the sun and fry like a bug in a microwave 3 hours into the start of the game.

Thus they will still exist in your game, they just won't be in your dorm where they will instantly die.