This long available control option is intended to level the playing field between keyboard and mouse control setups and HOTOS/HOTAS control setups. The mouse has long been able to offer the best in AIM qualities. I have never been a fan of ESP because it would alter the vector of my ship when you targeted, say a friendly ship or other targetable entity. Thus I finally setup a keybinding to turn it off and on.
There are a couple of settings for ESP, the size of the cone in which it operates called zone size and the amount of correction applied called damping. While you should experiment to see which settings are best for you, there is a recommended setup.
Zone size: 20 degrees
For a more in depth discussion check out the following tutorial.