I wasn't around back then, but I gather that this thing was created in the Plasma 4 days to support the alternative desktop layout that was used at the time. But today, we ship with Folder View on the desktop containment by default, and it can be configured to show files at a path, which can simply be $HOME/Desktop. So it seems like extra code to do a specific thing that is already handled generically by other things, and I'm wondering if we need to keep the desktop:// ioslave going forward at all.
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Create a file called foo.desktop with the contents
[Desktop Entry] Name=Hello World
dolphin will show "foo.desktop"
desktop:// will show "Hello World"
There are other solutions of course, but this is a valid and difficult problem which desktop:// solves