Similar to Universal Map Delay, by either alternating A and B inputs frame perfectly or pausing and re-pausing with start frame perfectly after saying 'Yes' to Iza to obtain the lent bomb bag, you can delay the forced item wheel from coming up until you stop alternating these inputs, allowing the item wheel to come up even at times it normally couldn't such as during cutscenes. Furthermore, while the item wheel is being delayed, it is possible to pause the game with start, which can be used to savewarp during a cutscene in order to skip the cutscene. The item wheel will fail to come up if IWD is deactivated during a load or while text, the map, or the pause screen is up.
Because the only known way to activate IWD is in Iza's hut where it has no known uses and the frame perfect inputs required for the glitch make maintaining it for any useful length difficult or impossible for humans, the only known uses for Item Wheel Delay are for TAS only.
Note that all videos demonstrating IWD use frame advance and/or a turbo cheat to perform the glitch. The videos below do not show human-viable techniques.
While IWD is active, it is possible to pause during cutscenes and savewarp to skip them. While it is still not useful for most cutscenes because of how much time it takes to set up, it has potential for a TAS for skipping the Squidna cutscene entering Hyrule Castle. TASes could also skip boss death cutscenes (likely only useful for IL TASes); past a certain point in each boss death cutscene, the savewarp spawn point switches from the dungeon entrance to the boss room with the Midna portal active.
Another application of savewarping during cutscenes is duping hidden skills by savewarping between the textbox saying Link has learned a skill and the end of the Hero's Shade cutscene. This results in Link keeping the hidden skill he just learned and the golden wolf remaining in place, ready to teach Link another hidden skill.
IWD makes it possible to pull the item wheel while using an item. While using bottle contents, force unequipping the bottle by equipping something else on its button results in the bottle contents effects being applied without emptying the bottle. The video below demonstrates using Great Fairy Tears without emptying the bottle.
There are other ramifications of IWD, none of which are useful in speedruns:
Other context and minor notes can be found linked in a discord post from Jacquaid.