It creates a tangent basis by using DDX and DDY of the separate UV channels. These are called ‘partial derivatives’. It will not work for mobile platforms as a result.
The material must have “tangent space normal” unchecked and then you just use the output WorldSpaceNormal from the DeriveTangentBasis function and you are good to go. There may be some slight lighting seams since the derivatives have facets due to linear interpolation of the UVs. You’d just have to try it to see how bad they are. Generally, the more you rely on intense vertex smoothing the worse they will be. But the blue part of your normal map looks relatively flat so you should be ok.