It was explained to me that it actually causes some sort of damage to neural synapses in the brain...........a short circuit.....something like the effect of lights blinking can cause an epileptic seizure in people.........I have seen some really really OCD dogs who were conditioned by people playing with pointers with them...one dog would just stare at the ground and pounce, over and over if his owner did not constantly correct him...the dog ended up being euthanized for some problem - possibly related - it was a couple of years ago....
I had a cat who would chase an opthamalscope light years ago when the ex was in vet school, so dogs are not the only ones who can be obsessive about light chasing...
Lee