In Traditional Chinese Medicine (TCM), Rou Gui belongs to the 'Herbs that warm the Interior and/or expel Cold' category. Herbs in this category are used for Internal Cold with Qi Deficiency and/or Yang Deficiency. In the Yin and Yang system of thought Yang is Hot in nature. A deficiency of Yang will therefore lead to Internal Coldness since there will as a result be more Yin (Cold in nature) than Yang. In extreme cases this can lead to so-called 'Yang collapse' with convulsions or coma and these herbs are particularly indicated to treat such scenarios.
As suggested by its category Rou Gui is Hot in nature. This means that Rou Gui typically helps people who have too much "Cold" in their body. Balance between Yin and Yang is a key health concept in TCM. Those who have too much 'Cold' in their body are said to either have a Yin Excess (because Yin is Cold in nature) or a Yang Deficiency (Yang is Hot in Nature). Depending on your condition Rou Gui can help restore a harmonious balance between Yin and Yang.
Rou Gui also tastes Pungent and Sweet. The so-called 'Five Phases' theory in Chinese Medicine states that the taste of TCM ingredients is a key determinant of their action in the body. Pungent ingredients like Rou Gui tends to promote the circulations of Qi and Body Fluids. That's why for instance someone tends to sweat a lot when they eat spicy/pungent food. On the other hand Sweet ingredients tend to slow down acute reactions and detoxify the body. They also have a tonic effect because they replenish Qi and Blood.
The tastes of ingredients in TCM also determine what Organs and Meridians they target. As such Rou Gui is thought to target the Heart, the Kidney, the Liver and the Spleen. In addition to regulating Blood flow, in TCM the Heart is believed to be the store of the 'Mind' which basically refers to someone's vitality. The Kidneys do not only regulate the urinary system but also play a key role in the reproductive system and the growth and aging process of the body. The Liver is often referred as the body's "general" because it is in charge of regulating the movements of Qi and the Body Fluids. It also takes a leading role in balancing our emotions. The Spleen assists with digestion, Blood coagulation and Fluids metabolism in the body.