The Shrink Wrap command resizes the window so that it is exactly the same size as the image at the current zoom factor. If the image doesn't completely fit on the screen, the image window is enlarged so that the largest possible part of the image is shown. Please note that GIMP will do this automatically if you set the “Resize window on zoom” and “Resize window on image size change” options in the Image Window page of the Preferences dialog.