This upgrade increases the amount of missiles your ship can carry. With no upgrade your ship can carry 20 missiles per mission. Higher upgrades increase that amount. Note that your launcher is able to load 4 missiles ready to fire at a time. That amount doesn't increase regardless of upgrades. The number of missiles left in your ship's supply for the mission and the number currently loaded and ready to fire are shown in your interface as shown to the right.
Upgrades are listed below (links go to the torhead database):