Every cloud service type of project contains .cscfg file and primarily is used for storing --
Number of role instances to deploy for each role in cloud service project
Thumbprint of certificates used if any
And most important, User defined configuration settings
The primary aim or purpose of this file is to allow configuration changes in production environment without downtime of your application.The .cscfg file settings can be modified from the azure portal itself. This means you don't have to redeploy the entire application which could have been the case if you have had used web.config file and needed a change in it. This is the benefit of cloud configuration file over web.config file.
As cloud configuration file is not bound with application no app pool restart scenario happens upon changes.