From Adobe Systems:
Due to the way Photoshop 5.0 currently handles color conversions, black-and-white images--when converted to an Indexed Color palette--often lose their pure black and white color extremes. When installed in Photoshop's Plug-ins folder, the Force Black and White Extension Plug-in forces Photoshop 5.0.x to include pure black at the beginning of the palette and pure white at the end of the palette
whenever a document is converted into the Indexed Color mode using the adaptive palette. Images converted in this fashion will work in the applications that require pure white and pure black palette entries, but the colors chosen will be slightly less optimal for the image since there are two fewer available.