The oxidative squats are to develop the oxidative capacity of the slow twitch muscle fibres, I believe.
I am pretty sure the tempo the squats are done at stimulate hypertrophy of the slow twitch fibres, and so when the slow twitch fibres grow, there is more aerobic enzymes and what not produced as well, which improves how well the muscle can use oxygen.
I am still somewhat unsure of when this type of work would be preferred over more traditional aerobic work.