With narcissistic withdrawal, the subject rebels from society (and authority figures) and retreats into him/herself, into his or her own ego. This is like retreating to a place (the person's mind) where no outside person can harm or have any affect. In one respect, this is a way of the self protecting itself. In another respect, it is selfish (a. k. a. narcissistic) and some subjects withdrawal in this way because they think that they can provide all the nature and nurture that they need on their own. One such example is with a subject who can not commit to any long term relationship because there is the danger that he/she will eventually get hurt. Therefore, by retreating into himself, he avoids such a danger. The problem of course is that he will never have a fulfilling social life: i. e. being with others.
It is a retreat, self-protection, and often a negation of the social world. So, it is useful as a self-defense mechanism but it is also destructive in that the narcissist can regress to such an extent as extreme self-love (megalomania) which would be extreme selfishness or the other route to extreme self-negation in that the subject might even seek suicide as the complete retreat from any possible harm, even within his own ego.
So, although it is a form of protection, it can result in self-destructive behavior. And in Freudian thinking, it is essentially a regression and a negation or withdrawal from dealing with the social world, from dealing with the subject's fears in that world. In other words, in this respect, it is hiding from the problem.