The help file says that the +l or +L switches create a custom window as a tool window, but I have been unable to determine what this actually means.

Can anyone help?

It lets you make a custom window without a titlebar, and if the titlebar does appear you can make it not show the minimize/maximize icons next to the upper-right X.

/window +Ld @xyz

Notice there's no X to close the window, so you will need to close it with:

/window -c @xyz

Does that mean that it has to be a desktop window (as in your example)?

Look at /help window
There's +L and +l, though I'm having trouble now getting the tool window to open as a desktop, maybe it's because I'm running the beta