The "Master project" property is used to link a project with iPhone-sized pages to the same project with iPad-sized pages.
In our production workflow at Madefire, we will often layout the book for iPad, and then save duplicates of all of the pages, and then change the size of the pages to iPhone. Those iPhone-sized pages are then put into a separate project. Then, we'll have someone else work on the iPhone pages, mainly fine-tuning the text so that it reads better on the smaller screen.
When the iPhone pages are ready to be published, the "Master project" of the iPhone project is set to the original iPad-sized project. That way, when the iPhone project is published, it is considered the same book as the iPad project; it's just a different size.
For more information about this advanced feature, please consult the Motion Book Tool User Guide.