Like NiTriStrips and NiTriShape, it's a type of geometry supported in NetImmerse and Gamebryo. A NiLinesData record linked in NiLines contains information about vertex connectivity — every element of an array in it defines whether there's a line between the vertex with the same index and the next vertex — and may be used for something like particles.
Morrowind itself doesn't exactly support it due to an engine bug (it either crashes or doesn't load the entire record), but MWSE contributors managed to make it work by patching the record's loading process, and future mods may depend on it. More recent TES games may include proper support for it and meshes that rely on it as well.
A test model courtesy of EJ-12.
This is roughly how it is supposed to look like.