The line of code you posted is equivalent to
WDCTL = 0b1000;
That would set the watchdog timer to have a period of approximately one second, meaning that it would take one second before the Wixel resets. The code I posted sets the watchdog to have a much shorter period of a few milliseconds, allowing the Wixel to reset quickly. The CC2511 datasheet has more information about the WDCTL register and the bits in it.
Also, your code does not have an infinite while loop in it.