Well, CFM is Code Fragment Manager, which is (I believe) the way shared libraries work on newer OS's pre-X (8 and 9 I think). See
About the Code Fragment Manager
Then there's the fact that LaunchCFM is located in /System/Library/Frameworks/Carbon.framework/Versions/Current/Support; the important part being Carbon.
Finally, a 'strings LaunchCFM' says (among other things):
Usage: LaunchCFMApp <CFM file>
So it probably is some kind of glue to run Carbon apps compiled for X and pre-X versions (as opposed to Carbon apps compiled only for X, which are Mach-O).
Of course, this is all speculation, so this could be completely wrong...