Yes, as far as I know it is an undocumented feature, though well known for quite a time. I remember of this matter being brought to our attention in the PM-WIN discussion list.

As you noted it toggles the "Sort unread before read". If you click the unlabelled column-header and then open the Folder menu, you'll see that the option "Sort unread before read" is shown ticked/unticked after each click.

If you click the unlabelled column-header box above the Message Status Indicators,
all unread messages are brought to the top regardless of sorting order.
(The read messages sort order remains unchanged)

It acts as a toggle, so clicking it again restores unread messages
to the chosen sort position.

NOTE: I could not include an image.
The toggle is just left of  | From | Subject | Date/Time | Size  Column Headers