1) It's both a warning, that they may be following and a request for the police to follow them.
2) It's not an everyday feature on such vehicles, and can make the drivers of other vehicles think there's a problem. As already mentioned, the system allows for tighter turns than expected from such a vehicle.
Do you really think the police would follow a van because it has a sign on the back saying "Police Follow"?
Have you ever been behind a coach and noticed it's rear wheel steering and thought there's a problem or it's turned round a corner you didn't expect it to?