This will likely not mean a ton to most people, but for photographers and other creative professionals who often shoot in a wider-gamut than sRGB, this will be key to being able to share images on Instagram that accurately represent the color of the image as intended. But Instagram on iOS will not stop at just displaying wide-gamut color as users of the Iphone 7 and 7 Plus will also be able to capture images with that wider gamut.
To demonstrate just how much having access to the wider gamut can affect the images we are viewing on Instagram, the company has shown an image of a room at Instagram Headquarters (seen above). The bright oranges, blues, and purples of the image are not represented well in the sRGB color space, so to illustrate they released the same image with the colors outside of the sRGB color space changed to blue. As you can see, the majority of the image was outside of the space, and this meant losing detail and color accuracy in the image.
This information was disclosed in an Instagram engineering blog from their iOS team, so if you would like a deeper dive into the feature and what went into it you can find all that information here.