Just basic chemistry really, its also the way I super-chlorinate my pool. It removes chloramine and other bonded molecules. Hypochlorous acid from the free chlorine takes ammonia away from the chloramine.
I have always tried to be chemical free with my water as much as I can. Before I got my 6 stage RO water treatment system this was the way I did it. I have a 150 gallon livestock water container I did this in. I got this idea from my pool one day when I was super-chlorinating it. Knowing pool chemistry, I knew this took about all impurities from water and the chlorine would evaporate in hours. So I gave it a whirl. The water seemed to test OK for fish use. I began to use it and had wonderful success. No more dechlor/treatment crap to buy, I was happy and the fish seemed great!
If a old house has old pipes chloramine can increase the lead exposure and increase health risks. Chloramine can contribute to respiratory problems as well. Either way chlorine (which can increase cancer) or chloramine both have their benefits and down falls I guess.