When you "reference" the machine, Mach3 travels to the home switch, and sets the axis to machine coordinate zero when it hits the switch.
With slaved motors, each motor can move to it's own switch independently. So if the gantry is out of square, each side will move until it hits it's switch, squaring the gantry back up.
A home switch can be used as a limit switch, and vise versa.