These things are red and white and are known as Trade Plates. They are used in the motor trade to enable people to drive vehicles that would not be covered on the vehicle's own insurance. The insurance goes with the plates, not with the vehicle.
Some examples:
A garage mechanic doing a test drive.
Somebody delivering a vehicle to a customer.
Somebody delivering an unregistered vehicle from a port or assembly plant to a dealer.
With trade plates you can drive a vehicle that doesn't have a road fund licence, but only for the purpose of moving it about.
You're not supposed to carry passengers, and certainly not allowed to carry a load on a commercial vehicle.
So basically, the guys you see on the side of the road with these things have delivered a vehicle and are either trying to get a lift home, or to their next job.
I seem to remember that Buenchico used to do this, perhaps he'll add anything I've forgotten.
p.s. Many years ago you used to see blokes delivering coach chassis under these circumstances. No body on the vehicle, no windscreen, no seat belt, just sitting on an old chair that may or may not have been bolted down! Madness.