Chrooting is all about running in a chroot jail, or in other words, a small cpy of the system that is all the process can access.
In the case of the Bind configuration you mention, when Bind is run in chroot mode, /var/named/chroot/var/named looks to the process to be /var/named. Hence if someone exploits some DNS vulnerability, all they can mess with is in this chrooted /var/named, and they can't (supposedly) access anything in your genuine / directory.
I hope this makes some sense.
On the downside, applications that require acces to, say, /etc/passwd will need a chrooted copy of this filee maintained, and often /bin files as well. All this means that there is more to maintain on most systems that run chrooted.