http://www.bmwworld.com/technology/dsc.htm
DSC mainly applies the brakes to reduce the wheels of slipping out of control. If this is not enough the traction control will also be activated and torque will be reduced to the "out of control" slippling wheels.
Living in the rocky mountains I have many times tested the differences in handling of the X3 with DSC on or off at snowy intersections.
With DSC on: Whenever I enter a snowy or icy corner
purposely too fast for the conditions the back end will slip out and suddenly you feel the brakes being automatically and sometimes even heavily applied, to slow the over spinning wheel(s) down and bring the back-end back in place.
Now doing the same thing with DSC off: the back end will come out and if I don't ease of the throttle myself, I will/can do a complete donut or spin out.
You can SAFELY try doing donuts on an EMPTY snowy/icy parking lot with dsc on and then dsc off. With DSC on: garanteed you will feel the brakes being applied and the completion of a donut will be severely limited. DSC off = multiple donuts until one is dizzy or had enough.
Fred