Basically, the mode makes it easier to grab photos from a 4K video stream, even at 4:3 and 3:2 aspect ratios. However, there are three drawbacks which are good to know about:
1. Using the 30p mode, you can use this mode to continuously take 30 frames per second, and then later browse through them to see which you would like to save. There is one big disadvantage, though: You only get the JPEG file, no RAW file.
This is in contrast to the Nikon 1 cameras, which can take 60FPS continuously, and save the RAW files. I've used the Nikon 1 V3 to take pictures of birds in flight at 20FPS, and it can do fast and accurate AF-C at the same time. This feature makes the Nikon 1 cameras well suited for sports, action and wildlife photos.
2. Contrary to the normal picture mode, the 4K Photo mode does not use the whole sensor. Just like the 4K video mode, it only uses a part of the sensor, as illustrated below:
Essentially, you have an extra crop factor of 1.3 when using the 4K Photo mode. So a 14mm lens becomes equivalent to 18mm on Four Thirds, or 36mm on a traditional film format.
The good news in this respect is that you can choose other aspect ratios than 16:9. With the previous firmware, you were of course free to record 4K video and then grab still images from it, but you were limited to the 3860x2160 pixel crop (16:9). Now, you can also use a number of other aspect ratios.
3. When using the 4K Photo mode, you use the electronic shutter, not the mechanical shutter. This can lead to rolling shutter effects, since the images are read out sequentially, row for row, rather slowly. So avoid panning, or photographing objects that move horizontally, when using the 4K Photo mode. Here is an example pair of images showing the rolling shutter side effects, with both images taken at 1/320s shutter speed.
4K Photo mode
Using the 4K Photo mode, the car is skewed due to the rolling shutter effect. If you keep the camera steady, and you don't photograph fast moving objects, this should not be a big issue.
Just how fast is the electronic shutter in 4K Photo mode, anyway? An easy way to evaluate that, is to take a picture with a fast shutter speed in artificial light. The light at my home flickers at 100Hz, since there is a 50Hz power source. Here is what this looks like in 1/250s shutter speed:
4K Photo mode
I count about 3.3 stripes in electronic shutter mode, and 2.5 stripes in 4K Photo mode. This corresponds to an electronic scan of 1/30s and 1/40s, respectively. So the 4K Photo scan is the fastest, which is natural, as it does not use the whole sensor area. Notice that the crop is tighter, for the same reason.
1/40s 4K Photo scan time is faster, but still slower than the competing Nikon 1 system, which has an electronic shutter readout of 1/80s, fast enough that it is rarely a problem in real life use.
As you could extract still images from the 4K videos previously as well, I don't see this new mode as a big improvement. It does add the extra aspect ratios like 4:3, though, which is useful.