It being checked allows for multiple in context references. Example you have a plate in an assembly with 15 parts on it. You want to use those fifteen parts to be the basis for mounting holes. So you edit your plate in the assembly and put your mount holes in your plate you can choose the first parts holes as your reference point, but on the second part you cannot get a reference to the holes. In this situation the box you have shown is NOT checked. In order to create multiple in context references this box must be checked. If you do not use a lot of in context design un checking the box will keep you from accidentally creating in context situations where you do not want them.
It being checked allows for multiple in context references. Example you have a plate in an assembly with 15 parts on it. You want to use those fifteen parts to be the basis for mounting holes. So you edit your plate in the assembly and put your mount holes in your plate you can choose the first parts holes as your reference point, but on the second part you cannot get a reference to the holes. In this situation the box you have shown is NOT checked. In order to create multiple in context references this box must be checked. If you do not use a lot of in context design un checking the box will keep you from accidentally creating in context situations where you do not want them.