What is the purpose of a diverter valve in a boiler?

As it is inside the boiler it would be a combi boiler . That is a boiler that heats hot water instantaneously and also does heating. On hot water demand being sensed the divrter valve moves to shut off the pathway to the radiators and open a pathway around the secondary heat exchanger where the hot water is indirectly heated. The water in the primary heat exchanger heated by the burner is then pumped round this circuit to provide heat to the mains water flowing through.