Don't know also. I suppose it should luac sources. if you open luac.exe and drag a .lua to command prompt and enter he does something. However I didn't get here it saves. Tried also with .love files but nothing happens.
It's effectively the same thing as the Love2d compiler mentioned in the wiki. If you start lovec.exe, and drag a .love file on it, it will pack it into the main executable.
You need some version of make and zip installed (like the ones through mingw32). As I'm a linux user, it's hard not to have those available. So, if your love compiler is designed just to add a .love and the .exe to each other, a neat feature would be to fill the gap that my makefile does, packaging your files on demand.