What does Piriform Defraggler's "Optimize" option for SSD do?

At best it can TRIM the disk. Effectively running through any unallocated space and telling the drive what areas are specifically unallocated and can be reclaimed for use. The blocks that are reclaimed can be pre-emptively erased before they are required for writing and so potentially improve performance.

Trim was introduced soon after SSDs were introduced. Because low-level operation of SSDs differs significantly from hard drives, the typical way in which operating systems handle operations like deletes and formats resulted in unanticipated progressive performance degradation of write operations on SSDs. Trimming enables the SSD to more efficiently handle garbage collection, which would otherwise slow future write operations to the involved blocks

If the blocks are not erased beforehand then you may notice a drop in write speed as they must be erased before being written.

This should already be being done on a regular basis by your operating system, but there should be little harm in issuing a TRIM slightly more regularly. There's little reason to do it more often either than really necessary though, unless you regularly fill up and delete a lot of data on your disk.

Actual defragmentation though is pretty unnecessary and potentially harmful to the lifetime of the drive as it will be actively copying and writing to the disk and wasting cell write cycles.