The effect is that you will automatically unlocked all purchasable characters on the Shop menu. However, this does not allow to automatically unlock any secret, tourney, or limited characters.
Characters that are also obtained by the gamepass that were not bought before will have 0/0/0 upgrades until the player buys the actual character in the shop to upgrade them normally.
"This is unnecessarily overpowered. You have to click the "Game Pass" button for the roster of characters you can play as.
[Note: Excludes secret or bonus characters]"