I think all it does is make your nonstackable seeds harvested before peculiar seeds were introduced (i.e., before early 2009) stackable. If you get old brightly colored seeds to stack using the box, my guess is that you probably have to use poppy dust on the stack in order to make them stack with the same type of seeds harvested after we got peculiar seeds.
It seems to me that when they added peculiar plants and made seeds stackable, all the seeds got new identifiers that were inconsistent with their old identifiers. When you plant old seeds and dump them out of the pot, that updates their identifying information and also makes them stackable. But I think the seeds you harvest now from brightly colored plants are glitchy and are not labelled properly. (Hopefully I didn't get that backwards, has been a while since I messed with my seed supplies.)