That's literally all it does.
To make a users' tag rainbow; go to your server's data area and find the rainbow tag folder, (~/.config/SCP Secret Laboratory/RainbowTag) on Linux
and add their SteamID64's to the existing file. One ID per line.
rt_timer_delay
- the time in seconds between color changes. Defaults to 0.1 second(s).
reloadrainbow
- RA command to re-save the list and apply changes to the tags.