It reduces all fire damage to 5% of its original damage, making the Flamethrower and Napalm Strike nearly worthless against the player. It will also set the fuse of any live gernade you pick up, to 2.5 seconds, giving you considerably more time to throw back/throw away, an enemy gernade.
All of this is in addition to the 35% decrease of all explosive damage provided by the base flak jacket perk.