The LENGTH() function returns the length of text that the action is operating on.
The LENGTH() function is a special context sensitive function that only works in a few actions, like the Substring or Apply Style actions, returning the length of the processed text (so, for example, you could have the text size be dependent on the length of the text).
LENGTH() will not give you the character count of a simple string – for that you can use the CHARACTERS function or the Character Count Filter.