What this quote means is that General Zaroff has his own way of making sure that enough ships get wrecked to supply him with sailors to hunt. He is explaining Sanger Rainsford how his system works.
What he is saying is that he has set up a lighthouse of sorts. But instead of having the light show the safe passage through the rocks, his light is actually luring ships onto rocks where they will be destroyed.
When the sailors from these ships come ashore, Zaroff will use them in his sick "game."
In Richard Connell's "The Most Dangerous Game," this scene is when the villain gets caught monologuing, pridefully telling his enemy all of his evil secrets and schemes.
General Zaroff tells Rainsford how "Shiptrap Island" gets its name. Whereas sailor lore explained it as a mystery (like the Bermuda triangle), Zaroff explains the method of how he wrecks ships to get his stock of sailors on his island to hunt.
Zaroff uses the light from his island to lure the ships into a narrow and shallow channel, and so the ships sink from the jagged rocks beneath. The sailors swim to shore, and Ivan is waiting there to capture them. Then, Zaroff hunts and kills them, one by one.
He finishes the quote off with a little Zaroff zinger, an analogy: the rocks can crush the hull of a ship the same way he can crush a nut. Evil laughter to follow...