It is s actually very handy. If you have it enabled, it loads the vertex weight by vertex ID. So that each vertex has a number in the mesh, like 1, 2, 3, 4, etc. Vertex 1 may be weighted for 10% to bone03 and 90% to bone06. So it loads the weights back to vertex 1, with those numbers. And if you switch it off, it loads the weights by vertex POSITION. This is great in case the vertex indices have changed (i.e. by welding some vertex or other reasons).