Octave pedals allow you to transpose the pitch of your notes in octaval increments - creating the same note you are playing but with doubling (or halving, if you are shifting lower) its frequency at an exponential rate. You can then choose to switch in between your dry and wet signal, or even blend the two signals to create a harmonic effect using the two different pitches of the same note.
The simpler octave pedals on the market may provide basic transpose tools that allow you to increase or decrease your pitch by one or maybe two octaves, and use an across-the-board algorithm no matter how complex your note patterns may be. More advanced octave pedals can accommodate your complex patterns and chord sequences, using more sophisticated tech to assess your note combinations and sequences and calculate a more intuitive result.
Some guitarists use their octave pedals alongside other effects pedals to simulate the sound of a bass guitar. Octave pedals aren't exclusive to guitarists either; bass octave pedals can be used in a reverse manner, allowing you to run your transposed signals through other effects to simulate guitars - see Royal Blood’s Mike Kerr for inspiration.