Previously only available for CRM Online, the CRM Diagnostics tool is now released with CRM 2011 Update Rollup 4 for On Premise installations.
It runs a couple of tests, measuring latency to the datacenter/server, bandwidth, and performs a few Javascript performance tests to measure the CPU/browser performance of the machine.
You can access the tool using the following URL after you install UR4 or later.
http://<serverUrl>/tools/diagnostics/diag.aspx
The latency and bandwidth test the download speed across the wire from the CRM web site to the client browser. A low latency and high bandwidth is ideal. If your values show a high latency and low bandwidth then your CRM experience may be slow depending on the extremity of the range. For some performance reading you can take a look here.
Optimizing and Maintaining Client Performance for Microsoft Dynamics CRM 2011 and CRM Online
http://www.microsoft.com/download/en/details.aspx?id=23261
Optimizing Performance for CRM Online 2011
http://community.dynamics.com/product/crm/crmnontechnical/b/crmonlineteam/archive/2011/04/08/optimizing-performance-for-crm-online-2011.aspx – even though this is for Online there are some important points
Microsoft Dynamics CRM 2011 Performance and Scalability with Intel
http://www.microsoft.com/download/en/details.aspx?id=16673
Improving Microsoft Dynamics CRM Performance and Securing Data with Microsoft SQL Server 2008
http://www.microsoft.com/download/en/details.aspx?id=8438
Optimizing and Maintaining the Performance of a Microsoft Dynamics CRM 2011 Server Infrastructure
http://www.microsoft.com/download/en/details.aspx?id=27139
The above documents should give you a solid understanding of performance related improvements you can apply to your Dynamics CRM deployment.
The JavaScript test items are testing your CPU/browser performance of your machine. Ideally you want low values here and upgrading your IE browser to the latest version should give you the best results.
Happy tuning.
Cheers,
Rhett Clinton
Dynamics Bing'd 