The action of the screw within a nozzle with a small clearance between the tips of the prop blade and the walls of the nozzle ( clearance about 1/100 of prop diameter) is to eliminate or reduce trailing vortices which cause loss of efficiency and cavitation at the blade tips The propeller increases efficiency by about 0.4% and their is additional reduction in vibration, cavitation and erosion. It is particularly effective for tugs where they provide an initial thrust although they can cause problems with manoeuvring
From an operational point of view there are problems with cavitation around the inner section of the nozzles although from what I have seen this is not particularly severe. It is important to ensure contant clearance betwen the blades and nozzle inner circumference. this is particularly important say when fitting a new blade to a CPP. Failure to do so can lead to increased vibration, noise and cavitation